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Refinery Moves Forward Despite Opposition |
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By Diego Cevallos*
In
spite of skepticism among some experts, Mexico is pushing the Mesoamerican
refinery, the star of a sustainable energy integration plan with
Central America and Colombia.
MEXICO CITY - The Mexican project to build
a refinery in Central America is running into obstacles that are
making it unfeasible, say observers. But the region's governments,
including the outgoing administration of President Vicente Fox,
assure that it is an excellent idea that will become reality.
Four months ahead of the elections to choose Fox's successor and
nine months before his term ends, the government is not letting
down its guard on this proposal. The refinery, with a four-billion-dollar
price tag, would process crude from Mexico and manufacture petroleum
derivatives for Mexico and its Central American neighbors, where
oil production is minimal.
"We are betting that the refinery -- which would basically be private
-- will be built, because it would benefit everyone," Salvador Beltrán
del Río, director of international affairs for Mexico's Energy Secretariat,
told Tierramérica.
The Fox administration is not discouraged by gloomy forecasts for
this country as an oil exporter, or the dramatic decline in oil
sales to Central America, or the rejection of the plan by leftist
Andrés Manuel López Obrador, who polls indicate is the front-runner
among Mexico's presidential candidates.
Crude oil from Mexico, whose reserves are on the decline and can
assure only 13 years more of production, supply just 1.2 percent
of Central America's annual oil consumption. Venezuela is the leading
supplier of petroleum and derivatives to Central America, followed
by the United States, Ecuador and Chile.
From March through the end of May, a private consulting firm, hired
by the Inter-American Development Bank (IDB), will conduct studies
to determine in which Central American country and under what conditions
the refinery could be built.
Beltrán del Río said he is confident that the consulting firm will
bring good news and stressed that the Mexican government plans to
contribute to the construction of the refinery, but would leave
its administration in private hands. "It is a project that would
be protected from any shifts in the political sphere," he said.
The refinery is the star of a sustainable energy integration project
involving Mexico, the Central American countries and Colombia, and
includes electrical interconnection, construction of gas pipelines
and promotion of renewable energy as well as energy efficiency,
at a cost of nine billion dollars, and backed by the IDB.
According to the Fox government, the project would free its partners
from supply problems, shore up integration, reduce pollution, reduce
transportation costs, strengthen cooperation, and make Central America
a more attractive region for investment.
But for now that enthusiasm is focused on the refinery.
The head of the energy unit at the Economic Commission for Latin
America and the Caribbean, Fernando Cuevas, told Tierramérica that
the plant would generate employment and attract investment in companies
associated with the provision of goods and services.
If the refinery is built, "the main benefit would be a new supplier
of derivative products for the Central American region, which would
allow increased competition. That could translate into reductions
in prices in each country, as long as the number of actors and the
level of competition is strong."
He added that today "there is very limited refining capacity in
the world, which could become critical in the next five to 10 years
if new refineries aren't built."
Mexico promises to supply the new plant with a daily average of
250,000 barrels of heavy crude.
In 2005 Mexico produced 3.3 million barrels a day, a rate slightly
below the previous year. According to several studies and experts,
this would be its ceiling, because from now on output, they say,
will begin to decline.
Behind the promotion of the Mesoamerican refinery is the fact that
Mexico, where petroleum is managed by the state-run company Pemex,
has little money to build a new refinery within its own territory
and legal limitations for partnering with private firms.
But Pemex can receive private resources and work in partnership
with other companies as long as the business is outside Mexico.
In addition to Pemex's financial troubles, that is why in recent
years most of Mexico's petroleum has been refined in other countries.
Expert David Shields, who heads a specialized energy publication
in Mexico, told Tierramérica that the Mexican plan for setting up
a refinery in Central America "isn't logical." In the project, he
said, "everything is more or less a fraud."
Mexico's crude oil is very heavy to transport to the region, and
in the five or six years it would take to build the refinery, if
nothing out of the ordinary happens, Pemex will no longer have enough
crude to supply the plant, said Shields.
"But one can always go forward with a project (that appears) unfeasible,
as long as it has political or economic support, like that of the
IDB," he added.
Roger Cerda, former director of the Nicaraguan Institute of Energy
and current advisor to that country's Central Bank, also questions
the refinery project. "It's a proposal pulled out of nowhere" with
the aim of counteracting Venezuela's proliferation of oil deals
in Central America, Cerda told Tierramérica.
"The problem is that it's quite an ambitious and costly project
and at its roots is only inspired by a difficult juncture, which
could make it fail," he said.
The governments of Central America see in the Mexican proposal the
salvation for the region's oil supply problems and hope for a green
light at the end of May, when the presidents will gather to fine-tune
the project.
In Central America, Guatemala alone is an oil producer, while refineries
exist only in Costa Rica, El Salvador and Nicaragua. In the rest
of the countries these plants have been shut down due to financial
or technical problems.
In 2004, the region imported 94.7 million barrels of hydrocarbons,
of which 83.5 percent were derivatives, and only 16.5 percent crude
oil. The total value of those imports was 3.95 billion dollars,
23.3 percent more than in 2003.
Beltrán del Río, Mexico's Energy Secretariat spokesman, said there
are no brakes on the plan, unless the consulting firm conducting
the assessment decides to rule it out.
"Mexico and Pemex assure that the refinery will have sufficient
resources and petroleum to ensure its operation, but if at some
point there is the possibility to process crude in other countries,
go ahead, we aren't opposed at all," he said.
* Diego Cevallos is an IPS correspondent.
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