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Cuba, Venezuela sign new accords on oil, gas

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Dec. 15 -- Venezuelan President Hugo Chavez and his Cuban counterpart, Raul Castro, have signed agreements to expand the capacity of two refineries in Cuba and to construct a third one.

Altogether, the expansion plans will see Cuba's refining capacity increased to 350,000 b/d from the current 87,000 b/d, according to a statement from Venezuela's state-owned Petroleos de Venezuela SA (PDVSA).

Under the agreements, the capacity of Cuba's Cienfuegos refinery will be stepped up to 150,000 b/d from the current 65,000 b/d, while the Hermanos Diaz refinery in Santiago will rise to 50,000 b/d from 22,000 b/d.

PDVSA said the proposed refinery in the port city of Matanzas will have a capacity of 150,000 b/d, and is to be managed by Cuvenpetrol SA—a new joint venture of PDVSA and Cuba's state-owned Cupet.

PDVSA did not reveal the respective stakes of the two sides in the joint venture or a schedule for the expansion of the existing refineries or the construction of the new one.

However, the Venezuelan firm said that Cuvenpetrol will control all refining interests in Cuba being pursued by the two countries, including the design and construction of an LNG regasification plant, gas pipelines, and other facilities.

The agreements signed this week mirror earlier ones between the two countries.

In April 2006, PDVSA entered into an agreement with Cupet to establish a joint venture company to refurbish and expand the Soviet-built facility at Cienfuegos that had been neglected since the start of the 1990s, when Soviet assistance to Cuba ended.

Under the earlier Venezuelan-Cuban JV, the refinery's capacity was initially raised to 65,000 b/d. The upgraded Cienfuegos refinery was inaugurated in late 2007 and started operations in January.

The Cienfuegos refinery is expected to close 2008 with production of 20 million bbl of fuel, according to deputy director, Raul Perez, who said the plan for the refinery envisaged output of 19.4 million bbl for the year.

Cuba imports 100,000 b/d from Venezuela in oil and products under special financial conditions that include bartering for Cuban goods or services such as doctors, teachers, and athletic trainers.

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