BEIJING (Dow Jones)
China's largest oil company and its biggest commercial bank have shown strong interest in joining an Ecuador-Venezuela refining project planned for Ecuador's Pacific coast, a senior minister from the Andean country said Friday.
China National Petroleum Corp., the country's top oil producer, and Industrial & Commercial Bank of China Ltd. (601398.SH), its largest commercial bank by assets, will hold follow-up talks in Quito in June on joining the venture, Minister Coordinator of Strategic Sectors Jorge Glas told Dow Jones Newswires.
China's funding of some of the project will further swell a torrent of Chinese money sloshing into Latin America.
The Washington-based research institute Inter-American Dialogue said in February that China's loan commitments to the region in 2010 hit $37 billion, more than those of the World Bank, US Export-Import Bank and Inter-American Development Bank combined, with Venezuela, Brazil, Argentina and Ecuador being the largest recipients.
Glas was speaking at the end of a visit to China for talks with oil companies and financial institutions about their possible roles in the $13 billion Refineria del Pacifico--a 300,000-barrel-a-day refinery and petrochemical complex due to be built by Ecuador and Venezuela by end-2016.
CNPC and ICBC have already signed a letter of intent to join the project, and are now negotiating a strategic alliance with the Ecuadorian government, Glas said. He declined to discuss the size of the potential equity stake or financing. "This will be a very complicated process" and will take several months to decide, he said.
Ecuadorian President Rafael Correa said on April 22 that China is "very interested in financing practically all" of the project, which is for now 51%-owned by Ecuador's state-run Petroecuador and 49%-owned by Venezuela's state-run Petroleos de Venezuela.
"China has a surplus in liquidity but a shortage in oil for its consumption, while Ecuador has surplus in oil but needs liquidity, so the operation is attractive for both parties," Correa said.
In their talks, CNPC and ICBC explored a wider alliance that could bring them into the entire supply chain for the project, Glas said, hinting that this could also involve oil production and them taking some of the gasoline and diesel offtake from the refinery.
"There are also some other countries, other than Venezuela and Ecuador, showing strong interest in supplying crude oil to the refinery," he said.
Engineering plans for the refinery were due to be presented in the next few months, and construction should start later this year, he said.
The minister declined to talk about a separate $1.7 billion loan from China which Ecuador's central banker said in February is now under negotiation, saying it fell outside his remit.
China has become the largest source of financing for Ecuador since it defaulted in 2008 on about $3.2 billion of its global 2012 and 2030 bonds, which effectively shut it out of private capital markets.
Chinese financing for Ecuador now totals $7.25 billion, including $2 billion from advances for oil sales, the Ecuadorian government has said.
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