Chavez signs oil deal with Ecuador
QUITO, Ecuador
Venezuelan President Hugo Chavez signed crude oil and natural gas deals with Ecuador Tuesday in a move that extends the leftist leader's clout in Latin America.
Chavez, at the forefront of a leftist shift challenging U.S. influence in the region, visited the Ecuadorean capital weeks after Quito terminated a contract with Occidental Petroleum, straining relations with Washington and sparking fears of an oil nationalization.
Chavez's commitment to refining up to 100,000 barrels of Ecuadorean oil per day is the latest example of his use of his country's oil operations to build regional support.
The two countries agreed to create joint companies to improve Ecuadorean refineries and the transportation and storage of natural gas. The joint companies will also facilitate the exploration, production and refining of oil.
"We respect the internal politics of each country. ... We only want integration, to get closer because it is essential to the future of our people," Chavez said inside the national palace during his scheduled six-hour stay in Ecuador.
Chavez congratulated his counterpart Alfredo Palacio for recovering "Ecuador's natural resources." He was referring to Ecuador's decision to terminate Occidental's contract.
Outside the palace a cheering crowd held banners welcoming the former military officer and self-proclaimed leftist revolutionary who leads the world's No. 5 oil exporter.
In a similar trip to Bolivia last week, Chavez promised to invest $1.5 billion in the country's natural gas-dominated sector. Bolivian President Evo Morales nationalized his impoverished country's energy sector earlier this month.
Leftists in Quito voiced support for Chavez's anti-American politics. Business leaders accused him of political intervention.
Ecuadorean officials tried to lower the political tone of the visit by portraying it as technical, not political.
Ecuador oil needs
Chavez and Morales are close allies and, with Cuban President Fidel Castro, have formed a leftist alliance to counter what they call U.S. political and economic hegemony in Latin America.
The United States accuses Chavez of destabilizing the region and earlier this month President Bush said he was concerned about the erosion of democracy in Bolivia and Venezuela.
Ecuador has scarce refining capacity and this year expects to spend $1.7 billion on petroleum-based products imports, or 20 percent of the national budget.
The Andean nation stands to save $300 million a year on fuel imports through the deal with Venezuela to refine Ecuadorean crude at a lower cost. The deal will start in about 45 days, officials said.
Earlier in May, Ecuador terminated its contract with Los Angeles-based Occidental over accusations the company illegally sold part of an oil block without government authorization.
The company says it did nothing wrong and has filed an arbitration claim in Washington seeking $1 billion in damages.
State oil company Petroecuador took over operations at the oilfields, but many doubt it can keep up production for long.
Ecuador says it wants to forge a joint venture with another Latin American oil company to operate the oilfields. Venezuela's PDVSA is one of the candidates.
Venezuelan President Hugo Chavez signed crude oil and natural gas deals with Ecuador Tuesday in a move that extends the leftist leader's clout in Latin America.
Chavez, at the forefront of a leftist shift challenging U.S. influence in the region, visited the Ecuadorean capital weeks after Quito terminated a contract with Occidental Petroleum, straining relations with Washington and sparking fears of an oil nationalization.
Chavez's commitment to refining up to 100,000 barrels of Ecuadorean oil per day is the latest example of his use of his country's oil operations to build regional support.
The two countries agreed to create joint companies to improve Ecuadorean refineries and the transportation and storage of natural gas. The joint companies will also facilitate the exploration, production and refining of oil.
"We respect the internal politics of each country. ... We only want integration, to get closer because it is essential to the future of our people," Chavez said inside the national palace during his scheduled six-hour stay in Ecuador.
Chavez congratulated his counterpart Alfredo Palacio for recovering "Ecuador's natural resources." He was referring to Ecuador's decision to terminate Occidental's contract.
Outside the palace a cheering crowd held banners welcoming the former military officer and self-proclaimed leftist revolutionary who leads the world's No. 5 oil exporter.
In a similar trip to Bolivia last week, Chavez promised to invest $1.5 billion in the country's natural gas-dominated sector. Bolivian President Evo Morales nationalized his impoverished country's energy sector earlier this month.
Leftists in Quito voiced support for Chavez's anti-American politics. Business leaders accused him of political intervention.
Ecuadorean officials tried to lower the political tone of the visit by portraying it as technical, not political.
Ecuador oil needs
Chavez and Morales are close allies and, with Cuban President Fidel Castro, have formed a leftist alliance to counter what they call U.S. political and economic hegemony in Latin America.
The United States accuses Chavez of destabilizing the region and earlier this month President Bush said he was concerned about the erosion of democracy in Bolivia and Venezuela.
Ecuador has scarce refining capacity and this year expects to spend $1.7 billion on petroleum-based products imports, or 20 percent of the national budget.
The Andean nation stands to save $300 million a year on fuel imports through the deal with Venezuela to refine Ecuadorean crude at a lower cost. The deal will start in about 45 days, officials said.
Earlier in May, Ecuador terminated its contract with Los Angeles-based Occidental over accusations the company illegally sold part of an oil block without government authorization.
The company says it did nothing wrong and has filed an arbitration claim in Washington seeking $1 billion in damages.
State oil company Petroecuador took over operations at the oilfields, but many doubt it can keep up production for long.
Ecuador says it wants to forge a joint venture with another Latin American oil company to operate the oilfields. Venezuela's PDVSA is one of the candidates.
posted by Alice at
Tuesday, May 30, 2006
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