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 Business News | December 2005 
Regional Leaders Approve Mexican Plan to Build Central American Oil Refinery
 Will Weissert - Associated Press
| | Mexico's President Vicente Fox speaks during the Central America, Colombia and Mexico Energy summit Tuesday, Dec. 13 2005, in Cancun, Mexico. Leaders are discussing Mexico's plan to build a multibillion dollar oil refinery in their region, but they were expected to let a private company decide which country should host the project. (AP Photo/Guillermo Arias) |
Cancun, Mexico – Mexico will supply crude oil for a US$4 billion (euro3.4 billion) refinery that will be built in Central America, part of a sweeping energy plan approved this week by regional leaders.
Mexican President Vicente Fox, hosting a three-hour meeting with representatives from Colombia, the Dominican Republic and all of Central America, said the refinery will help reduce the region's dependency on foreign oil and keep skyrocketing prices at the gas pump in-check.
"Besides creating jobs, all of these projects succeed in making our region more competitive and attractive," he said.
Dubbed the "Cancun Declaration," an agreement signed Tuesday by the summit's participants calls for the construction of the refinery, as well as a plant for liquefied natural gas, a hydroelectric dam and a gas pipeline stretching from Mexico to Panama.
It also opens the door for Mexico's government-controlled oil company, Petroleos Mexicanos, to establish gas station franchises across Central America.
The power grids of Mexico and its neighbors to the south also will be linked as part of a connection that will one day stretch to Colombia. Work has already begun on a power grid linking Mexico with neighboring Guatemala.
The refinery will be funded by private interests, but governments throughout the region will be allowed to contribute as shareholders, the summit's declaration states. It is expected to be capable of processing up to 300,000 barrels of crude oil a day.
Fernando Canales, Mexico's energy secretary, applauded the plan, saying it "guarantees the availability of competitive energy prices, protects nations from volatility in international prices ... and generates jobs."
The only objection came from Costa Rican President Abel Pacheco, who said he supported the project, despite concerns it may increase the region's dependency on oil, which he likened to a drug-addiction.
The leaders agreed to create a Central American development fund, which will be fed in part by funds from the United States, Canada, Spain and Great Britain.
They also promised to hold another summit next year in the Dominican Republic to officially begin work on the agreement, including construction of the refinery and hydroelectric plant. The two will be built in separate countries.
Mexican authorities have listed Guatemala, Costa Rica and Panama as likely sites for the refinery, but a firm chosen by the Inter-American Development Bank will make the final decision on where it should be built.
The hydroelectric plant will cost at least US$250 million (euro212 million) and will generate up to 350 megawatts of power.
A regional regulatory commission will set standardized rules for distribution of oil, natural gas and electricity throughout Central America.
Mexican Foreign Secretary Luis Ernesto Derbez said the entire energy initiative could cost up to US$9 billion (euro7.6 billion) and may take four years to fully implement. Fox's term ends in December 2006. He is barred by law from seeking re-election. |
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