China's CNPC to join key Ecuador refining project

CNPC expects to firm up a draft pact by end 2013 to join a major refinery project in Ecuador and expand its oil exploration efforts there, CNPC said.

CNPC Chairman Zhou Jiping had signed a framework agreement with Ecuador's Coordinating Minister for Strategic Sectors and Petroecuador's President, under which CNPC "will take a share in the construction of the Pacific Refinery project and participate in the exploration and development of Ecuador's upstream resources."

"Further negotiations will be carried out on the basis of the agreement, and the cooperation contract is expected to be signed within the year," CNPC said in a statement on its website. It didn't give details of its planned equity state or upstream expansion.

CNPC, which produces more oil and gas than any other Chinese company, already owns four oil and gas blocks in Ecuador.

In January, Ecuador's Coordinating Minister for Strategic Sectors Rafael Poveda told Dow Jones Newswires that talks were under way for CNPC to take a 30% stake in the 300,000 bpd Refineria del Pacifico project, in which Petroecuador owns 51% and Petroleos de Venezuela the rest.

If an agreement with CNPC is reached, 30% of the funds needed to build the refinery will come from the three partners. The rest will be financed by a group of Chinese banks headed by the Industrial & Commercial Bank of China, Poveda said at the time.

China has become the largest source of financing for the Andean country since Ecuador defaulted on its global bonds in 2008.

Ecuador produces just over 500,000 bpd and hopes to expand this to 525,000 bpd by the end of the year.