December 17, 2005
Presidents of Brazil and Venezuela push to integrate infrastructure and economies

(AP Worldstream) - "The presidents of Venezuela and Brazil pressed forward with plans to built a shared oil refinery at this Atlantic port, vowing to bolster South America's neglected infrastructure.

Venezuelan President Hugo Chávez and his Brazilian counterpart Luiz Inacio Lula da Silva laid the cornerstone for a US$2.5 billion (A2.09 billion) refinery that will process heavy crude from Venezuela's huge Orinoco Belt and Brazilian offshore fields.

The refinery won't come online until 2011, but it's already a symbol of the converging geopolitical and economic interests of both countries _ and the growing regional influence of the visiting Venezuelan president.

Analysts say the joint construction project shows how South American nations are increasingly building the infrastructure needed to do business directly with each other.

'We'll spend 10 billion, 20 billion dollars, but we're going to integrate South America ,' Silva told a cheering crowd of about 2,000. Many wore red T-shirts saying, in Portuguese, 'The refinery is ours.'

Chávez blamed high oil prices on the lack of refineries and on capitalism. 'Refining oil is not a very lucrative business; the profit margin is small. Voracious capitalism goes always after the maximum profit and very few want to invest in refineries. But investments should not be oriented only by profit but also by the needs of development and of lowering costs,' he said, speaking to reporters after the ceremony.

The refinery in Brazil is the first to be built in this country in 30 years.

Chávez paid a short visit to a nearby town named after Jose Inacio Abreu e Lima, the Brazilian hero after whom the refinery also will be named.

Abreu e Lima fought along with Venezuelan hero Simón Bolívar for independence from Spanish colonial rule. Chávez reveres Bolívar and calls his leftist-populist government a 'Bolivarian revolution.'

With construction slated to start in 2008, the Jose Inacio Abreu e Lima refinery will process 200,000 barrels of oil daily to produce diesel fuel, naphtha _ a solvent used to make petrochemicals and fertilizers _ and other oil products.

Venezuela, the world's fifth-largest oil producing nation, would guarantee a market for at least 100,000 barrels daily in Brazil, South America's biggest nation and largest economy.

This new market will be a departure from Venezuela's traditional buyers in the United States and Europe, analysts note, and Brazil benefits, not only by creating thousands of jobs in its poor northeast region, but also by securing refining capacity for the heavy crude oil from its offshore Marlim field, near Rio de Janeiro.

'If it doesn't hurt Brazil, as it seems it doesn't, why not?', said Alexandre Barros, of Brasilia-based Early Warning analyst group. 'If Brazil can profit from business with its neighbors, so much the better.'

Brazil also is pushing to improve roads, railroads and bridges as a way to boost continental trade.

Early this week, Silva visited Colombia and signed agreements to build roads to improve links and increase bilateral trade between the neighboring countries. Similar agreements have been signed with Bolivia and Peru, as Brazil seeks new trade routes to the Pacific Ocean and Asia.

The refinery in Suape, located 1,180 miles (1,900 kilometers) northeast of Rio de Janeiro, also is seen as a major technological challenge. It will process thick oil-based tar from fields in the Orinoco belt that must be upgraded to make it refinable".