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Mexico Offers Oil to New Refinery

It would supply 230,000 barrels of crude a day to a proposed facility in Central America.

May 30, 2006|From Reuters

Mexico has offered to supply 230,000 barrels of crude per day at market prices to an oil refinery to be built in Central America, officials said Monday.

Deputy Energy Minister Hector Moreira said Mexico would be able to supply that amount of crude by 2011, the date by which the planned refinery is due to be completed.

"Mexico can assure 230,000 barrels a day," Moreira said. "We are going to sell at market prices. In no way will we subsidize the refinery."

The proposed refinery is part of an ambitious energy development initiative, dubbed the region's biggest project since the Panama Canal. The project also would pipe natural gas down the Pacific coast and join up power grids.

Promoted as a way to end Central America's dependence on costly foreign imports, the $7-billion to $9-billion program also means lucrative new outlets for Mexican and Colombian oil and natural gas.

It could clash with plans by major oil producer Venezuela to supply cheaper energy to the hemisphere.

Central American presidents will meet in the Dominican Republic next weekend to discuss the location and scale of the refinery.

It has not been decided whether to build a mid-size refinery with a 365,000 barrel-a-day processing capacity or a smaller version that would process 255,000 barrels a day.

If the larger plant is built, Mexican supplies of crude to the refinery will have to be supplemented with additional imports. In the case of the smaller plant, the tiny crude production from Guatemala and Belize could make up the difference.

Costa Rica, Guatemala and Panama would all like to see the refinery built on their territory.

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