Venezuela's state oil company Petroleos de Venezuela S.A. (PDVSA) is considering upgrading Uruguay's La Teja refinery to process Venezuelan oil in the most recent step to increase oil sales to Latin America, a company official said.
PDVSA refining chief Alejandro Granado revealed the talks with Uruguay during the visit of a business delegation which included Uruguay's vice-president Rodolfo Nin Novoa and Agriculture Minister Jose Mujica.
"We are having discussions about expanding the (La Teja) refinery and moving to a deep conversion process for heavy Venezuelan crude", added Mr. Granado.
Uruguay short in energy and rich in agriculture commodities expects to increase bilateral trade mostly by selling beef, dairy products and rice in exchange for oil and Venezuelan investment in infrastructure and possibly Uruguayan sovereign bonds.
Actually Venezuelan President Hugo Chavez is scheduled to visit Uruguay next August 10, to keep the momentum of the first Bilateral Business Round held in Caracas from July 26 to 28, announced Venezuelan Foreign Trade and Integration Minister Gustavo Marquez.
"There are great opportunities flowing from the progress achieved in tourism, energy, transport services and communications", said Mr. Marquez expanding on Uruguayan Vice President Rodolfo Nin Novoa words who said that "South Americans had turned their backs on each other for too long". The minister said the business round managed deals totalling 57 million US dollars, -not including energy-, and almost double 2004 bilateral trade.
Uruguay refinery talks come as Venezuela's government seeks to strengthen its political influence in Latin America through preferential oil deals. President Hugo Chavez, a fierce critic of U.S. hegemony in the region, says the oil supply deals will help neighboring countries cut energy costs and improve living standards.
Critics say Chavez is using oil to win political support in the region amid growing tensions with the United States. U.S. officials have sought to portray Chavez as authoritarian and a risk to political stability in Latin America. Chavez, who is up for re-election next year, has denied the charges and accused the United States of meddling in his country's internal affairs.
Refineries need special units to process Venezuelan crude, which is heavy in sulfur and difficult to process. La Teja has an installed capacity of 50,000 barrels a day. Earlier this year, Venezuela agreed to supply Uruguay 43,800 barrels of crude oil a day under preferential terms. Similar conditions to which Cuba and several other Caribbean countries have adhered.
Venezuela is the world's fifth oil exporter and remains a major supplier of fuel to the United States but has made clear it is looking to diversify its market. Besides increasing sales in Latin America, Venezuela's government has discussed plans to build a pipeline through Colombia to reach the Pacific for export to China with which it recently signed a long term oil supply agreement.