Brazil, Venezuela ink deal for refinery

Brazil and Venezuela have agreed to build a US$2.5 billion oil refinery, the highlight of a South American summit to boost trade and cooperation.

State-owned Petroleos de Venezuela, PDVSA, and Brazil’s government oil company Petrobras signed the agreement Sept. 29, as the presidents of eight South American nations prepared to meet Sept. 30 in the Brazilian capital.

Venezuelan President Hugo Chavez and Brazilian leader Luiz Inacio Lula da Silva were in the spotlight, as they announced plans to jointly build a refinery complex to process up to 200,000 barrels of heavy oil daily. The complex, to be built in the northeastern Brazilian state of Pernambuco, will refine oil from both countries for the Brazilian market.

“This is the way our two nations, ever closer, will proceed,” Chavez said after the chief executives of the two oil companies signed the refinery agreement.

The agreement calls for Petrobras to drill in Venezuela’s oil-rich Orinoco Belt area, and Chavez said Petrobras will operate oil fields that contain twice as much petroleum as U.S. reserves.

“It is not every day we get a partner of this size,” Silva said.

Financing will be equally split between state-run PDVSA and Brazil’s government oil company Petrobras, and the refinery will be ready to operate in 2010 or 2011, said Venezuelan Foreign Minister Ali Rodriguez.

Petrobras also will be authorized to drill in Venezuela’s oil-rich Orinoco Belt area, he said.

—The Associated Press