海角大神

Last Sunday鈥檚 reelection of Venezuelan President Hugo Ch谩vez could turn Nicaragua into major oil exporter before the end of the decade.

As President Ch谩vez tackles the herculean task on investing in the modernization of sluggish state oil company Petr贸leos de Venezuela (PDVSA) 鈥� the golden goose that funds the expansionist Bolivarian Alliance for our Americas (ALBA) 鈥� Venezuela鈥檚 long-stalled plan to build a $6.6 billion oil refinery in northwestern Nicaragua is being given new relevance and urgency.

The so-called 鈥淪upreme Dream of Bol铆var鈥� refinery in Nicaragua would give Ch谩vez a Pacific gateway to China 鈥� a key market for Venezuelan oil exports as the country tries to ramp up its slumping production levels after years of falling behind other oil-producing nations.

鈥淐h谩vez needs to focus on increasing his country鈥檚 level of oil production and investing in logistics for the future," says Nicaraguan political analyst Arturo Cruz, President Daniel Ortega鈥檚 former ambassador to the United States and a professor of political science at INCAE. "This project is a no-brainer; it鈥檚 the perfect arrangement because Nicaragua is an ideological ally and the refinery will give Ch谩vez strategic access to the Chinese market, 鈥� says Mr. Cruz.

An ALBA legacy

Cruz says the refinery megaproject meets the main political and economic objectives of both Ch谩vez and Ortega. In addition to becoming an emblematic legacy project for ALBA (after years of unmet promises), the 鈥淪upreme Dream鈥� oil refinery will also become a linchpin in the future economic expansion of Venezuela and Nicaragua 鈥� not to mention an important move to break their countries鈥� economic dependence on the United States.

The refinery will also allow Ortega to create jobs in a country rife with poverty and unemployment 鈥� Nicaraguans鈥� two principal concerns, according to polls. The construction of the oil refinery will create an estimated 5,000 direct jobs and 15,000 indirect jobs, while the operation of the plant will create an additional 1,500 direct jobs and 6,000 indirect jobs, according to government projections.

The success of the project would, in many ways, be a lasting 鈥� not to mention polluting 鈥� monument to ALBA. On the other hand, if the project fails to materialize, as so many other ALBA projects have, it will be an enduring reminder of the leftist bloc鈥檚 ultimate failure to deliver on its populist promises.

In 2008, in response to Nicaraguan media reports that the refinery was way behind schedule, Venezuelan Ambassador Pedro Prenso said the Supreme Dream of Bol铆var is 鈥渢he most important project that is being developed on the Central American isthmus.鈥�

But now five years have passed and the only thing that has been built is an access road to the future construction site. In total, ALBA has spent only $92 million 鈥� mostly in studies and fussing about 鈥� of the $6.6 billion that the project is projected to cost. As bulldozers continue to push dirt around in circles, the refinery鈥檚 superlative claim to be the most important project in Central America is starting to sound a bit silly.

That鈥檚 why the Sandinista government is suddenly anxious to move the project forward, before the cornerstone placed by Ch谩vez and Ortega in 2007 gets completely lost in the weeds. Sandinista officials insist the delays are normal for a project this size 鈥� the biggest and most expensive ever attempted in Nicaragua.

Three-phased plan

鈥淭he dimension of this project, with the technical complexity that it has and the size of the investment requires a lot of studies, just like any other big investment projects in other countries,鈥� Energy Minister Emilio Rapaccioli says.

Mr. Rapaccioli insists the project is going to happen and says the legislative National Assembly鈥檚 recent approval of the project was a big step in the right direction.

On Sept. 20, the National Assembly approved the three-phased plan for the refinery and an oil pipeline across Nicaragua. The project will be handled by the company ALBA de Nicaragua, or ALBANISA, a mixed Venezuelan-Nicaragua venture that is managed like Ortega鈥檚 private business.

The assembly鈥檚 rubberstamp approval was mostly symbolic, but it lent a sudden sense of official importance to the bulldozers鈥� busywork.

Once the refinery is completed (perhaps in 2017, since the 2012 deadline has come and gone), Nicaragua will have a聽total fuel-storage capacity of nearly 1 billion barrels of diesel, gasoline and fuel oil, according to government plans. Not only will Nicaragua be able to supply China and its own domestic needs, where gas pump prices are the highest in the region, but also supply 40 percent of Central America鈥檚 oil needs.

Nicaragua is already dabbling in oil exports. According to government data, ALBANISA this year has exported $42.5 million worth of Venezuelan oil, mostly to El Salvador. The terms and conditions of ALBANISA鈥檚 oil-exporting business remain a Sandinista secret.

PDVSA鈥檚 game of catch-up

Despite sitting on the largest oil reserves in the world, Venezuela鈥檚 oil production has declined by an estimated 30 percent since Ch谩vez took power 14 years ago, according to industry sources. At the same time, Ch谩vez continues to stretch Venezuela鈥檚 oil assets thin as he doles out billions of petrodollars to finance his populist political project, which is tied to a bloated portfolio of foreign and domestic projects 鈥� not to mention dozens more that never materialized.

Given Venezuela鈥檚 current production rate and ALBA鈥檚 expanding commitments, Ch谩vez would be in serious trouble if world oil prices were to dip below $90 a barrel (prices are currently at $92.39 a barrel), according to Cruz鈥檚 calculations.

Regardless, Cruz says, it makes no sense for Venezuela to slowdown its production levels when it鈥檚 sitting on 250 years of oil reserves and other oil-producing countries such as Russia and Saudi Arabia are pumping it out of the ground as fast as they can.

Ch谩vez needs to make hay while the sun shines because 鈥渋n 20 or 30 years, oil might not be as valuable,鈥� Cruz advises.

That means Ch谩vez needs to fulfill what he thinks was the 鈥渟upreme dream鈥� of his hero, Sim贸n Bol铆var, who, when not liberating South America from colonial rulers, was apparently fantasizing about one day converting Nicaragua into platform to export Venezuelan oil to China.

Reporting for this article was supported by a grant from on Crisis Reporting.

鈥� This story was originally published on .