PDVSA imposed its interests in the creation of the Pacific Refinery

Ecuadornews:

The company RPS Energy evaluated the work conceived in 2008, found surcharges and concluded that it did not meet the needs of Ecuador. According to the report, it was a mistake to build the early works without securing the financing.

 On January 7, eleven years have passed since Petroecuador and Venezuela’s PDVSA signed the memorandum of understanding in 2008 to create the mixed-economy company Pacific Refinery RDP Mixed Company, which was legally incorporated in July of that same year.

The Pacific Refinery, now called the Manabí Refinery, was one of the projects with greater ambition of the previous government. It was designed to process 300,000 barrels of crude a day, especially of Venezuelan origin.

The time passed without the government of then, and also the current one, getting the necessary financing to cover the $ 14.100 million budgeted initially for the project. After more than a decade there is only extensive flat land, early works, the La Esperanza aqueduct and a questionable managerial management, as well as legal processes linked to acts of corruption.

Around $ 1,531 million were spent in all that time, according to the firm RPS Energy LTD (United Kingdom) endorsed by the United Nations Development Program (UNDP-Ecuador) to make a technical and economic evaluation. Some $ 395 million were distributed in studies, engineering and licenses; $ 218 million in management; $ 678 million in early works; $ 84 million in operating expenses; and $ 157 million in taxes.

The RPS report states that 44% of the investment ($ 678 million) was allocated to early works (land, roads and camp, platform and aqueduct). However, it was a “wrong decision to proceed with the early works before securing the financing decision of the project,” says the report. To carry out the evaluation, the firm received 500 documents, but after reviewing its contents, it determined that at least 70% of the papers were not relevant for the analysis.

Missed important information related to reliability studies of the power plant, geotechnical studies that justify the type and volumes of contracted land movements, bases of the design of the aqueduct, and documents with the justifications to advance early works, among others.

On the La Esperanza aqueduct, for example, it is indicated that it does not even have a reactive maintenance as a result of an “absolute lack of budget”, according to operators’ statements. The evaluator recognizes that although the facilities are of excellent technical quality and new, “it is only a matter of time until there are major problems.” Even, it is not ruled out that if future anomalies are not addressed, the supply of fresh water to the municipalities of Manta, Jaramijó and Montecristi will be compromised.

The main operating costs of the Refinery correspond to the maintenance of the aqueduct. This work also detected illicit payments to Odebrecht. It was inaugurated in December 2016 by former Vice President Jorge Glas, convicted of the crime of illicit association within the builder’s bribery plot.

 The findings present multiple overpricing and call into question the control, for a possible conflict of interests. One of the novelties is that the land was given as a loan to Yachay, without any justification, said Carlos Perez, Minister of Energy and Non-Renewable Natural Resources.

The report states that Petroecuador, despite holding 51% of the shares, did not have a leading role. The interests of PDVSA prevailed. The visualization of the project was almost exclusively in the Venezuelan oil company, without Petroecuador having objected to the viability of size and capacity. The objectives of each partner “were never aligned with each other”. For RPS, the refinery, as it was conceived in 2008, “was not bankable or adequate to meet the needs of Ecuador.”

The company suggests that before filing or restarting the refinery it must undergo a process of reinvestigation, refocusing and revision, and reuse, in order not to start from scratch. In August of 2017, President Lenín Moreno arranged for Carlos Pérez to seek private investment and if he did not get it, the project should be discarded.

The Government has not succeeded. PDVSA raised an arbitration against Ecuador, which curbs the interest of investors. The search for financing among several international firms was made with a project revalued at $ 11,000 million. Currently, it is being studied to change its location to a site closer to the sea and with a lower capacity (110,000 barrels per day).

Timeline

The Pacific Refinery was born as a project with capacity to process 300,000 barrels of oil. The objective of the previous administration was to satisfy the internal demand of fuels and reduce the import of derivatives.

The State has invested $ 1,528 million and its construction does not register advances.

July 15 / 2018

The mixed economy company Refinería del Pacífico RDP is registered with the fourth public notary of the Manta canton. Its shareholders are Petroecuador, with 51%, and PDVSA, with 49%.

The ex-president of Venezuela, Hugo Chávez, celebrated the signing in Ecuador together with ex-president Rafael Correa. According to the company’s history, in July 2010 the environmental baseline studies were concluded, through which it was determined that the most suitable site was the El Aromo sector located between the cantons of Manta and Montecristi, province of Manabí.

August 12 / 2010

Former Vice President Jorge Glas joins the RDP board. The construction of the aqueduct and the removal of lands are agile.

August 15 / 2017

President Lenin Moreno announces that the Pacific Refinery will be built only if there are private investors.

January 29 / 2018

Thirty foreign businessmen visited El Aromo. President Lenin Moreno promised legal security to invest.

 January 07 / 2019

Research by RPS Energy Ltd. reveals overpricing and lack of studies. Several options are analyzed for its reactivation. (I)

Source: https://www.eltelegrafo.com.ec/noticias/economia/4/pdvsa-intereses-refineriadelpacifico-manabi