Ex Caracas Oil Head Don't Invest in Cuba

April 17, 2006, 6:58PM

Ex-Caracas Oil Head: Don't Invest in Cuba
By FABIOLA SANCHEZ Associated Press Writer
© 2006 The Associated Press

CARACAS, Venezuela — Venezuela's plans to refurbish an idled Soviet-era
refinery in Cuba represent a lost investment for this oil-rich South
American nation, a former president of the state-run oil company said
Monday.
ADVERTISEMENT
Click to learn more...

The Cuban government and state oil company Petroleos de Venezuela SA, or
PDVSA, announced an agreement last week for PDVSA to invest US$83
million (euro69 million) to rehabilitate the facility in the southern
coastal city of Cienfuegos to refine, store and distribute crude oil.

But former PDVSA president Guaicaipuro Lameda criticized the deal,
saying the refinery is too old to run profitably and too many of its
Russian-made parts would have to be replaced.

"Making an investment to make that refinery function doesn't permit
recovering the investment," said Lameda, who resigned in 2002 and
quickly became one of the government's most outspoken critics.

Lameda accused Venezuelan President Hugo Chavez of investing in the
aging refinery as a means of giving economic support to his close ally,
Cuban leader Fidel Castro.

The rehabilitated refinery would produce about 15,000 barrels of
gasoline, 14,000 barrels of diesel, 7,000 barrels of jet fuel, 33,000
barrels of fuel oil and 1,000 barrels of liquefied petroleum gas per
day, according to PDVSA.

Production is expected to meet local demand, plus a surplus of about
9,000 barrels of gasoline and 600 barrels of aviation fuel to be
exported each day to the Caribbean market.

Cuba will control 51 percent of the new joint venture, called PDV-CUPET
SA, with Venezuela holding the rest.

Lameda said a 2001 economic-risk study showed that revamping the
refinery would be a bad investment.

"Today it's less profitable because it's passed more time inactive," he
said.

Since taking office in 1999, the left-leaning Chavez has moved to
strengthen ties with communist-led Cuba.

Venezuela, the world's fifth-largest oil exporter, ships roughly 100,000
barrels of oil a day to Cuba under preferential terms, while Castro's
government has sent thousands of doctors to treat the poor in this South
American nation.

Venezuela is expanding its refining operations throughout Latin America.
PDVSA plans to build a refinery in Brazil and increase output at
refineries in Jamaica and Uruguay.

http://www.chron.com/disp/story.mpl/ap/fn/3799665.html