Oil companies from the Middle East, North America, East Asia, and South America are lining up to build refining capacity in Central America. What gives?
Perhaps the most intriguing development involves Venezuela and Nicaragua, whose leaders-Hugo Chavez and Daniel Ortega respectively-in late July launched a refinery project in the Central American nation (OGJ Online, July 23, 2007).
But Chavez has also cast his sights on other countries in the region, largely to compete with or otherwise complicate US interests. Indeed, Chavez, who seems to think Washington, DC, has a plan for his demise, is involved in a proxy war with the US with oil the main weapon, among others. As we know, at the end of June he stuck a knife in by demanding majority ownership of $31 billion worth of Venezuelan oil projects owned by US firms Chevron Corp., ExxonMobil Corp., and ConocoPhillips (OGJ, July 9, 2007, p. 20).
Guerrilla war
Chavez told his military to prepare for guerrilla warfare if Washington tries to topple him. Meanwhile, he also recently purchased $3 billion worth of conventional weapons from Russia. Meanwhile, apart from Nicaragua’s Ortega-an old US foe-look at Panama, where Petroleos de Venezuela SA (PDVSA) has plans to develop a 150,000 b/d refinery in Colon under its PetroCaribe alliance aimed at increasing energy ties between countries in the region.
Venezuela’s proposed cooperation with Panama in part would include reactivation of the Petroterminales de Panama’s (PTP) pipeline to enable PDVSA to supply countries like China, extending the region’s markets even further afield. Chavez’s move in Panama coincides with a number of things, including the planned expansion of the Panama Canal, which already sees passage of some 35 million tonnes/year of oil and products. Amounts will increase when the canal expands enough to handle Suezmax tankers.
Panama Canal
Panamanian authorities are already aware of the increasing significance of their country on the map of global trade, especially in oil. Indeed, as Panama’s minister of commerce and energy recently said, “It is time for Panama to maximize the value that our strategic position provides for the energy sector.” At the time, he was commenting that expansion of the canal places his country on the map of petroleum companies with “excellent track records” such as Qatar Petroleum and Occidental Petroleum Corp., which recently announced their joint intention of building a 350,000 b/d refinery there.
The partners say their Panama project will increase refining capacity in Central America five times over the existing rate. Not least, the refinery will supply cities in Central America and on the US West Coast.
The proposed Oxy-QP facility’s proximity to the PTP pipeline would also provide the possibility of supplying the entire Caribbean region, something Chavez desires.
Hmmmm. The region is beginning to look like a chessboard. Your move, Hugo!
