Refineria del Pacifico project

51% by Ecuador's state-run Petroecuador
49% by Venezuela's state-run Petroleos de Venezuela, or PdVSA.


JULY 7, 2011

Sinopec, SK May Finance Part Of Ecuador Refinery - Official

--Sinopec could finance between $3.5B and $5B of the Refineria del Pacifico
--Ecuador: SK Could Finance $1.9B Of Refineria del Pacifico

China Petroleum & Chemical Corporation, or Sinopec Corp, and South Korea's SK Engineering and Construction Co. are interested in financing a part of the $11.77 billion
Refineria del Pacifico project, said the project's general manager.

The new refinery project is key for Ecuador, which has to import such processed petroleum products as gasoline because of a lack of domestic refining capacity.

Additionally, many of the new oil discoveries in Ecuador are
heavy crude and cannot be processed at the country's three existing light-crude refineries.

Refineria del Pacifico will be owned
51% by Ecuador's state-run Petroecuador and 49% by Venezuela's state-run Petroleos de Venezuela, or PdVSA. Together those two companies will finance 30% of the project until the end of next year.

The project was announced in 2007, but Ecuador is still seeking investors to fund the other 70%.

In an interview with Dow Jones Newswires, Carlos Proano, the project's general manager, said
Sinopec is interested in financing the construction of the refinery units, while SK has proposed financing the power plant.

Sinopec could finance between $3.5 billion to $5 billion, while SK could finance about $1.9 billion. Neither company could be reached for comment.

Last month, after a meeting between Venezuela's President Hugo Chavez and Ecuador's President Rafael Correa, Proano said the Refineria del Pacifico would need another partner.

Asked if Sinopec will give a loan or is interested in being a partner of the project, Proano said, "We are trying to define what the future will be."

Meanwhile, persons close to the project said SK is interested in financing the power plant through a build-operate-transfer, or BOT, model but they didn't provide further details.

China has become the largest source of financing for Ecuador, following its default on global bonds in 2008.

Proano added that a list of a potential partners will be ready by the end of the year and a third partner for the Refineria del Pacifico could come by the end of 2012.

The Refineria del Pacifico project, to be built in the coastal province of Manabi, will include a refinery to process
300,000 barrels of oil per day, a basic petrochemical plant to produce benzene, xylene and polypropylene, and marine facilities onshore and offshore.

The plant is scheduled to go online in 2015 and to reach full production capacity in 2016.

Basic engineering is being carried out by SK Engineering. About 83% of that has been completed.

Proano also said companies from India and Germany are interested in financing the project, but he didn't elaborate.

"Last year, Ecuador imported about $3.5 billion of oil products. The new refinery is a strategic project to gain energy sovereignty," Proano said.


September 14, 2010

On July 15, 2008, Ecuadorean President Rafael Correa and Venezuelan President Hugo Chavez unveiled plans to build the Refineria del Pacifico refinery and petrochemical complex in Ecuador's coastal Manabi province. According to Correa, the new "Refinery of the Pacific" complex is intended to help Ecuador export crude derivatives.

Although Ecuador produces 600,000 b/d of oil, it must spend $3 billion annually on imports of gasoline and other products because its three existing refineries cannot process heavy crudes.

In addition to gasoline, the 300,000-b/d refinery will produce diesel. Also, production of fertilizers, urea, agrichemicals, and fibers at the complex will mark Ecuador's first foray into the petrochemical industry. The complex's location on the Pacific in Manabi province will enable it to target markets such as Chile, Peru, the United States, and Peru.

Although Petroecuador and PDVSA are currently the sole owners of the mixed company, they expect to add as other Latin American state-owned companies as shareholders. In addition, they envision raising project financing in international capital markets for the $6.6 billion complex.

In March 2010, South Korean-based SK Engineering & Construction Co. announced that it had won a $260 million order for a basic engineering study to build the refinery. Later that year, in September, Dow Jones Newswires quoted Ecuador's strategic sectors minister as saying that his government was seeking on to three strategic investors in the $12.5-billion project.

The official indicated that several South Korean and Chinese companies had indicated in interest in buying stakes in the project. Also, he said that his government was hopeful that third parties such as foreign banks could provide approximately 70% of the funding for the project. In that scenario, Petroecuador and PDVSA would cover the balance of the project cost.

The refinery is projected to begin operations in 2013.