Presidents Leonel Fernandez and Hugo Chavez in the Dominican Republic
This deal will put Venezuelan oil squarely in the Caribbean and make it much easier for Venezuela to provide oil to Haiti. Two articles follow:
CARACAS (Dow Jones)–Venezuela state oil company Petroleos de Venezuela (PVZ.YY), or PDVSA, on Wednesday agreed to buy a 49% stake in the Dominican Republic’s Refidomsa refinery, which can process 34,000 barrels of oil a day.
Oil-rich Venezuela is already a major supplier of crude oil to the Dominican Republic, and the purchase of a stake in the Dominican’s state-owned refinery will allow it to expand its role as a supplier of fuel in the Caribbean.
Venezuelan officials have said the 49% stake is worth more than $130 million, but have indicated that Venezuela would pay it by shaving off some of the debt that the Dominican Republic has with Venezuela.
The agreement was signed during a visit to the Dominican Republic by President Hugo Chavez, with PDVSA President Rafael Ramirez, who is also Chavez’ oil minister, by his side.
“This is very important, not just for the Dominican Republic but also for Venezuela because it puts us in the heart of the Caribbean,” Chavez said Tuesday, prior to his trip. “It will allow us to ship our petroleum for refining and distribution, not just within the Dominican market, but also throughout the Caribbean’s central market.”
The refinery, which began operation in 1973, manages the supply of about half of the Dominican Republic’s fuel needs.
Royal Dutch Shell PLC (RDSA, RDSB.LN) had been a 50% stakeholder in the refinery until late 2008, when it sold its stake to the Dominican Republic government for about $100 million.
SANTO DOMINGO, Dominican Republic (AP) — Venezuelan President Hugo Chavez met privately Wednesday with ousted Honduran leader Manuel Zelaya before heading off to finalize a refinery deal with Dominican officials.
Chavez declined to discuss his meeting with Zelaya except to say he will not attend a meeting in Spain of leaders from Latin America and the European Union if Honduran President Porfirio Lobo attends. Lobo won Honduras’ November presidential election, which had been scheduled before the coup last June that removed Zelaya.
“We’re not asking for much, just that Mel’s rights as a politician and citizen be restored and that he be allowed to return to Honduras,” Chavez said as he arrived at the Dominican national palace. “We’re not asking for the world.”
Zelaya has been living in the Dominican Republic since late January. He was ousted after he ignored orders from Honduras’ Supreme Court to drop his plan to hold a national referendum on modifying the constitution.
Chavez expected to sign a $131 million deal Wednesday that would give Venezuela’s oil company a 49 percent stake in Refineria Dominicana de Petroleo SA. The deal had been negotiated for more than a year.
Dominican officials have said the agreement could turn their country into an oil distribution center for the Caribbean and possibly Central America.
The Dominican Republic gets 50,000 barrels of oil daily under Chavez’s Petrocaribe program, which provides oil and natural gas at preferential prices. The country uses about 155,000 barrels a day.
With the deal, Dominican officials expect to recover the $110 million paid to Royal Dutch Shell in 2008 to buy the 50 percent of the refinery’s shares that the government didn’t already own.
The refinery on the outskirts of Santo Domingo produces 30,000 barrels of fuel a day, but Chavez said he plans to expand production to between 60,000 and 100,000 barrels daily. He did not provide details and did not say whether his government would provide funding.
Chavez has said that buying a stake in the refinery will also allow Venezuela logistically to provide fuel to Haiti as the earthquake-ravaged country rebuilds.