PDVSA plans Caribbean-Pacific oil pipeline

Eric Watkins
Senior Correspondent

LOS ANGELES, Dec. 19 -- Petroleos de Venezuela SA (PDVSA) plans to build a pipeline through Nicaragua to transport oil from the Caribbean to the Pacific, bypassing the Panama Canal.

The plans were confirmed by officials of the Nicaraguan-Venezuelan oil firm Alba Petroleos de Nicaragua (Albanic), which is managed by Nicaragua's Sandinista-controlled Association of Nicaraguan Municipalities (Amunic).

Albanic Pres. Jose Pena confirmed PDVSA's plans for an oil pipeline and mentioned its additional interest in building a refinery in Nicaragua to supply Central America with products.

Pena said the plans will be part of an accord to be signed by Venezuelan President Hugo Chavez and Nicaraguan President-elect Daniel Ortega after the latter is sworn in as president on Jan. 10.

Albanic Vice-Pres. Dionisio Marenco, a Sandinista member who also is the mayor of Managua, said the pipeline would serve as an alternative to the Panama Canal, which is too narrow to allow passage of most oil tankers.

Marenco said it would be used to boost exports of oil products made in Nicaragua from Venezuelan crude to China and Japan as well as the Pacific Coast of Central America. Nicaragua's only refinery is Esso Caribbean & Central America's 20,000-b/d facility in Managua.

In May, Ortega and Chavez signed a cooperation initiative that would enable Venezuela to sell oil to Nicaragua on credit.

Under the agreement, to be fully confirmed after Ortega's inauguration in January, Venezuela will accept 60% of payment within 90 days of shipment, while the remaining 40% will be paid off over 25 years at 1%, to include a 2-year grace period.

The creation of Albanic is widely seen as a sign of Ortega's growing political alliance with Chavez. ALBA stands for the Bolivarian Alternative for the Americas, a Latin American integration initiative started last year by Cuba and Venezuela, which aims to counter US efforts to promote hemispheric free-trade integration.

Contact Eric Watkins at hippalus@yahoo.com.

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