Petrobras and PDVSA agree new South American refinery

It was announced on Thursday that the state-owned oil companies of Brazil and Venezuela will share the cost and the use of a planned refinery to be built in Brazil’s northeastern Pernambuco state.

Petroleo Brasileiro SA (Petrobras) and PDVSA will each use half of the 200,000 barrel per day capacity of the refinery, which is to cost $2.5 billion.

The refinery is scheduled to be completed by 2010 and to be producing at full capacity by 2011.

The facility will refine heavy crude, with Brazil’s share coming from the Marlim field in the Campos basin and Venezuela’s share from the Orinoco belt. It will refine diesel, liquefied petroleum gas and naphtha to replace imports.

Petrobras also said that its board has approved a draft of an agreement with PDVSA to form a joint venture to develop Venezuelan natural gas fields in the northern Paria region. The two companies are also thinking about forming a joint venture to develop other Venezuelan oil and natural gas fields.

All these initiatives have grown out of the efforts of Venezuelan President Hugo Chavez to put together strategic alliances in Latin America and the Caribbean as an alternative to the economic dominance of the United States.