Petroindustrial to Launch Refineries Tender in 1Q04

The Petroindustrial refining subsidiary of Ecuador's state oil company Petroecuador plans to call for bids in the first quarter of 2004 for a US$350mn contract to upgrade the country's three ageing refineries, Petroindustrial VP Pedro Almeida confirmed.

Japanese, Chinese, Canadian and Russian companies have all shown their interest in bidding, newspaper El Comercio reported.

Petroindustrial could finance the upgrade through a US$300mn loan from Spanish bank BBVA, Almeida told BNamericas.

Petroecuador has hired the US firm Universal Oil Products (UOP) to study the refineries - Esmeraldas, La Libertad, and Amazonas - to determine if their capacity can be improved. La Libertad's capacity could be doubled to about 100,000 barrels a day (b/d), Almeida said, while capacity at Esmeraldas could also be improved from current levels of 110,000b/d, despite the age of the plant, El Comercio quoted UOP representative Pedro Fernandez as saying.

UOP's final report is expected in January-February, after which Petroindustrial will decide whether it will award a single contract to upgrade all three refineries, or separate contracts for each, Almeida said. "In January or February we should have an idea of what we really need," Almeida said, adding that Petroecuador is also considering building a new refinery. The US$1.1bn refinery would process heavy crude with a capacity of 110,000b/d, including 70,000b/d corresponding to the state's participation in private contracts and the rest from Petroecuador's own production, El Comercio reported.

"This is an alternative we are analyzing and would be the second stage of our program, which we will define next year, but the first stage is to improve the refineries we already have," Almeida said.

Refining costs in Ecuador are rising as a result of the low-quality crude that the refineries process, out-dated machinery, an oversized workforce and a lack of financial resources. Various proposals have been made to solve the problem, including closing down the refineries altogether and importing fuel, or building a new refinery. However, the government has rejected the idea of closing the refineries down and instead has opted to encourage private investment as part of its plan to open up the oil sector to foreign companies.

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