Venezuela reevaluates funding for 2 refineries

Venezuela is reevaluating how to pay for planned new refineries in Ecuador and Nicaragua, a top official in the state oil company said, because slumping oil prices have put a pinch on spending plans.

Under President Hugo Chavez, state-run Petroleos de Venezuela SA, or PDVSA, has agreed to help build refineries in political allies Ecuador and Nicaragua, which together could cost $7.5 billion or more.

Elogio Del Pino, a PDVSA vice president, told the Venezuelan newspaper El Nacional in comments published Friday that ""international investments like the refineries in Ecuador and Nicaragua are under evaluation.""

""Were asking to look for financing"" to help pay for the refineries, he was quoted as saying.

The review is a sign that the global economic downturn — and depressed crude prices — could be starting to restrict Chavezs ambitious international aid and oil investments. Borrowing, however, could help Venezuela meet some pledges if necessary.

Chavez has made plans to build various refineries in Venezuela and other Latin American countries as he looks to reduce reliance on U.S. refineries and the U.S. market — still his No. 1 client. Chavez has said his government may adjust some of its plans if oil prices remain low.

Del Pino said as he left a congressional meeting Thursday that PDVSA will reevaluate funding only for some international projects, and that domestic investment in the oil industry will be unchanged.

""The idea is to maintain investment in the country, because our idea is to have between 300,000 and 400,000 barrels (of oil) per day of potential — so that when the rebound in oil prices comes ... we can then open up that production,"" Del Pino was quoted as saying. The planned refinery in Ecuador would refine about 300,000 barrels of crude per day, while the Nicaraguan refinery would handle some 150,000 barrels.

Venezuela is a member of the Organization of Petroleum Exporting Countries and the worlds 10th largest producer. Venezuela is backing a proposed 1 million barrel per day cut at Saturdays OPEC meeting in Cairo in an attempt to boost prices.