Esteban Israel | Reuters
A unit of China National Petroleum Corp (CNPC) is set to begin in 2011 a $6-billion expansion project at Cuba’s Cienfuegos refinery in one of the biggest investments ever on the communist-led island, a source close to the project said Monday.
The blockbuster deal will be financed mostly by China’s Eximbank and backed by financial guarantees in the form of oil from Venezuela, Cuba’s close socialist ally and leading trade partner, the source said. State-owned CNPC’s Haunqiu Contracting and Engineering Corp is expected to start the project in the first quarter with completion planned for the end of 2013.
The Italian unit of French oilfield service company Technip will do design and engineering for the project and assist in construction.
The expansion will increase the capacity of the Soviet era refinery 155 miles southeast of Havana to 150,000 barrels per day from 65,000. It will also include construction of a liquefied natural gas terminal with capacity to process 2 million tons of gas annually, and a 150 megawatt electricity generation plant.
“It is one of the biggest investments in the history of Cuba. It’s a minimum of $4.5 billion just for the refinery and another $1.3 billion for the LNG terminal,” an executive involved with the project told Reuters.
The expanded refinery could play an important role in processing Cuban oil if the island finds significant quantities of petroleum in its waters in the Gulf of Mexico.
Several companies are planning to sink exploratory wells off Cuba’s northern coast starting next year.
The project greatly expands China’s role in Cuba’s energy sector, which, at least publicly, has been small. China is Cuba’s No. 2 trade partner.
Beijing is assisting in production of oil along Cuba’s northern coast and has leased an onshore block for exploration near Havana.