China to invest $9 billion in Ecuador oil refinery

After years of negotiations, Chinese officials are set to sign contracts with the Ecuadorian government to partially finance a new $10 billion oil refinery on Ecuador's Pacific coast, according to an official with the Peruvian government.

An initial sum of $2 billion from the Industrial and Commercial Bank of China (ICBC) will go to Petroecuador, the country's national oil enterprise, and the financial deal between the two will be signed by August, according to Rafael Poveda, Peru's coordinating minister of strategic sectors.

The second loan, which totals $7 billion, will be signed by September.

Poveda made his comments during a meeting with foreign correspondents hosted by Ecuadorian President Rafael Correa last week.

The project, known regionally as Refineria del Pacifico, is expected to process 200,000 barrels of crude a day and is being jointly developed by a trio of oil enterprises — the China National Petroleum Corp (CNPC), Petroecuador and Petroleos de Venezuela (PDVSA).

Operations at the facility are expected to begin in 2017, according to Reuters.

CNPC said in a statement on its website that the contract is "expected to be signed within the year".

CNPC, one of China's two main oil and gas companies, along with Sinopec, is headquartered in Beijing and its businesses cover new energy development, natural gas and pipelines, and petroleum exploration and production.

PDVSA is Venezuela's main gas and oil firm.

Ownership of the facility is divided among the group. Petroecuador retains a majority with a 51-percent stake in the site, while CNPC and PDVSA control 30 and 19 percent, respectively.

Officials from the Ecuadorian government have been in negotiations with China over the project since 2011, according to the New York Times.

Petroecuador, PDVSA and the Refinería del Pacifico project management team could not be reached for comment.

According to a 2014 report from the Energy Information Administration (EIA), a branch of the US Department of Energy, China held stakes in oil and gas ventures in Argentina, Brazil, Bolivia, Canada, Colombia, Cuba, Ecuador, Peru, the US and Venezuela as of 2011.

Since 2009, China has spent $59 billion on the acquisition of oil and gas assets in the Americas, the report said.

CNPC, which works in more than 30 countries, has operations in a number of Latin American countries, including Brazil, Colombia, Costa Rica, Cuba, Ecuador and Venezuela.

CNPC announced plans earlier this month to invest a minimum of $2 billion in Peru over the next decade.

The construction plan for the refinery in Ecuador has gone through a number of revisions since first being introduced in 2007.

Estimates for the plant were originally scheduled to cost $12 billion, but officials decided to split the construction into two stages, according to the New York Times. The first stage will enable to facility to process 200,000 barrels and the second will bring production to 300,000 at a later date.

In a June 10 Letter to the Editor of El Universo, one of Ecuador's largest daily newspapers, Kepti Lenin Tinoco, a chemical engineer in Guayaquil, Ecuador, said he has "great doubts" about the Pacific Refinery project, which has been talked about among the Ecuadorian community for the better part of a decade.

Tinoco wrote: "To design, build and operate a work of this kind successfully needs a lot of technology and experience. And the exact figure can't be determined until the end of construction and start of its operation. If funding for the Pacific Refinery will be by Chinese banks, the least we can ask is that Ecuadorian companies are in charge of the design and construction of this work."