Mexico’s plan to build Central American refinery to dominate regional energy summit
CANCUN, Mexico – Mexico’s plan to build an oil refinery in Central America to help reduce prices at the pump across the region seized center stage Monday, and promises to dominate a one-day energy summit in this resort city.During the meetings, which begin and end Tuesday, Mexican President Vicente Fox will huddle with his counterparts from Guatemala, El Salvador, Honduras, Costa Rica, Panama and the Dominican Republic.President Alvaro Uribe of Colombia will not be attending, nor will Nicaraguan President Enrique Bolanos, or Said Musa, the prime minister of Belize.The assembled leaders are expected to approve a sweeping energy project that calls for the construction of the oil refinery, as well as a plant for liquefied natural gas, a hydroelectric dam and a gas pipeline stretching from Mexico to Panama. An overhaul in the region’s electric power grid is also proposed.Fox said last month that the plan would likely cost US$7.5 billion (euro6.41 billion), but his foreign secretary, Luis Ernesto Derbez, said Monday night it could cost as much as US$9 billion (euro7.7 billion). He ducked questions about why cost projections have increased.But another top official in Cancun for the summit, Panamanian Undersecretary of Trade Manuel Jose Parades, suggested during a meeting with foreign reporters that the cost for the proposed refinery had risen from a bit more than US$3 billion to US$4 billion (euro3.42 billion).Parades said Mexico planned to commission studies determining the economic viability of the would-be refinery, thereby raising its price tag.The energy plan, which should take four years to complete, will be the region’s largest project since the Panama Canal, Derbez said.”The project is much more than a refinery,” he said. “It’s an integration of the region’s energy systems.”Derbez refused to say where the refinery might be built, but officials from Mexico’s Foreign Secretary said last week that Guatemala, Costa Rica and Panama were possible sites.Guatemalan President Oscar Berger plans to meet privately with Fox on the sidelines of the summit, but they will mainly discuss issues related to their countries’ common border, Derbez said.When asked about environmental concerns, Derbez said activists should back the energy plan because a new refinery will ultimately lead to production of cleaner-burning fuels in the region.Central America, which relies on imported fuel for nearly all of its energy needs, has been stung recently by high oil prices and desperately needs new energy sources.Guatemalan deputy Foreign Relations Secretary Carlos Ramiro Martinez said regional leaders staged a “technical meeting” Monday to hammer out the language of an agreement the presidents should sign at the conclusion of the summit.Derbez said that studies necessary for the implementation of much of the energy plan will not be ready until the middle of next year at the earliest, and that Mexico hoped to convince another summit next May in order to kickoff the plan. Martinez said he hoped the Cancun talks would speed that process up, however.The summit is also expected to produce an agreement creating a regional oversight commission that would strive for greater continuity in energy regulation and distribution in Mexico and Central America, as well as Colombia and the Dominican Republic.The proposed refinery is expected to be capable of processing up to 300,000 barrels of crude oil a day. An early proposal called for it to be funded 40 percent by Mexico’s government, 40 percent by private investment and left Central America responsible for 20 percent of its budget – but how leaders will decide to ultimately pay for it remains to be seen.