The Cable Directory

Venezuelan President Hugo Chavez on Thursday offered to help Ecuador build a $5-billion oil refinery, as the socialist leader pledged to spread his government’s oil wealth to another South American ally. Chavez is on a four-country regional tour, seeking to expand his nation’s influence by leveraging its vast oil reserves and create a “grand South American alliance” to counter U.S. dominance.

The Venezuelan leader arrived in Ecuador after stops in Argentina and Uruguay. In Buenos Aires, he announced plans to buy up to $1 billion in Argentine bonds, while in Uruguay he discussed ways to expand its lone oil refinery and guarantee access to Venezuelan oil and gas.

Chavez arrived in Bolivia late Thursday where he and President Evo Morales will sign a deal for a $600 million investment in oil and natural gas exploration in a joint venture between their state energy companies.

Morales and Chavez were also planning to sign a $70 million deal to build a hydroelectric plant in Bolivia’s central region of Andean foothills known as the Chapare.

Earlier Thursday, Chavez and Ecuadorean President Rafael Correa signed an agreement for construction of a giant oil refinery on Ecuador’s Pacific coast expected to cost nearly $5 billion.

Chavez stressed the importance of energy integration in South America and remarked in a news conference on the difference between his efforts and “the savage hand of imperialism” in Iraq, referring to the United States.

The United States is like “Count Dracula,” he said. “It wants to suck (the blood) of the world.”

Correa, an admirer of Chavez, said the Venezuelan leader was acting out of solidarity with countries in the region and had no interest in earning a profit from the cooperation.

“Venezuela is the one that is pushing hardest for energy integration and it is one that least needs it,” Correa said.

Chavez and Correa signed an agreement to begin technical studies on the refinery, which would process 300,000 barrels of oil a day. The agreement contemplates the possibility of adding a petrochemical plant at an estimated cost of $10 billion.

The leaders did not say how much each country would contribute to the project, noting that it would depend on the feasibility studies. They said construction of the refinery, to be located in the Pacific port of Manta, would begin next year and take four to five years to finish.

Ecuador currently produces 535,000 barrels a day of oil. But with limited refining capacity, it must export crude oil and import fuels at much greater cost to cover its needs.

Chavez has also spoken of $500 million in as-yet-unspecified financing for Ecuador, probably by purchasing Ecuadorean bonds.

Although Chavez is a popular figure in Ecuador, some are concerned about Ecuador’s close relations with Venezuela.

“It would be tragic and dangerous if we went from a supposed dependency on the United States to being dependent on Venezuela,” investment analyst Ramiro Crespo said.