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PetroChina, Ecuador, and Venezuela Team up to Build the Pacific Refinery

Aug 19 , 2015

Whatever you think of Rafael Correa–the outspoken President of Ecuador who is fond of taking shots at the U.S.–his country has grown richer and more politically stable under his rule. Correa has lots of reasons to despise Uncle Sam. His father was jailed in the U.S. for cocaine smuggling; there he committed suicide. As a protégé of the late, gringo-baiting Hugo Chavez of Venezuela, Correa is a believer in the decidedly anti-American, anti-imperialist Bolivian Socialist Revolution. Taking money from the rich and giving to the poor is a theme that resonates in Ecuador, which, like the rest of Latin America, was long dominated by the light-skinned oligarchy, many of whom have non-Spanish surnames.

Correa is not the first liberal president to take on the upper classes. The President has named the $14 billion Eloy Alfaro Pacific Refinery after President Eloy Alfaro, which is currently under construction. The liberal President Alfaro, who ruled from 1895 to 1901 and again from 1906 to1911, also took on the moneyed classes and the conservative Catholic power structure. For that, they killed him. But this was not before the President completed his own gargantuan engineering project: a railroad linking the major cities Guayaquil at sea level with Quito at 2,850 meters altitude, climbing the steep Andes to get there.

Before I tell you about the Chinese-backed Pacific Refinery–the largest project in Ecuador’s history, owned by PetroEcuador (51%), Petróleos de Venezuela (17%), and Petrochina (30%)–I want to give a little on-the-ground perspective of what life is like for people who live along the coast of Ecuador, which is where the refinery will be located.

Twenty years ago I went to Ecuador to visit my children’s great grandmother and aunts and uncles. We stayed in the port city of Guayaquil where everyone drips with sweat in the steaming humidity. Crime is a problem and every shop had an armed guard. At Toys “R” Us, men with machine guns guarded the parking lot from a crow’s nest. There was electricity only twelve hours per day. Even though we had to pay a bribe to the person at the ticket counter to board the sold-out flight, it was a relief to fly to Quito with cooler temperatures despite being only a few kilometers from the equator, the country’s namesake.

Along Ecuador’s poorer coast, entire villages relied on fishing, utilizing an enormous seine to catch shrimp larvae. Those would then be transported to huge salt-water ponds and raised to maturity and then exported to the U.S. and elsewhere. Pulling a net in the ocean looked like the only employment in town; people waited until the shrimp matured and harvested to do it all over again.


A lot has changed in 20 years and economic opportunity is looking up in that remote coastal region. With $9 billion in financing from Industrial and Commercial Bank of China, The Pacific Refinery will refine 300,000 barrels of heavy crude per day in the area between the towns of Manta, Montecristi, and Pacoche. This $14 billion project, which is being managed by the Australian firm Worley Parsons, will bring 1,500 permanent jobs to the region. During the long construction phase there will be 20,000 workers.

Currently 1,500 people are working there under the Brazilian firm, Odebrecht. They are clearing land, civil engineering, and laying a 93 km pipeline to bring in the enormous quality of water needed by the plant. It’s a bit amusing that Odebrecht is back now, having been previously expelled from the stalled project. Though this hasn’t slowed anyone: Ecuadorean workers have flattened 1,000 hectares of forest.

The refinery will help remove what is probably a huge annoyance for President Correa: Ecuador currently exports its heavy crude to the U.S. to be refined into gasoline. The country’s three aging refineries built in 1977 are designed to process lighter weight crude, which the country is drilling less of. With the new project and another loan from China, the President will be able to refit those existing refineries so that the country can become an exporter of refined petroleum products and gasoline—and not an importer, which is sort of ridiculous for an OPEC nation.

By law, projects like this are required to undertake public works projects. A project manager working on site told Oromar TV that the refinery has spent $13 million installing sewage systems and laying pipe to bring potable water to Bajos de la Palma (pop. 4,000). They have also built a health clinic, which the town also lacked. What the refinery is not funding is a much larger, costlier project in the city of Manta (pop +200,000), which is currently overhauling its sewage and water system with financing from the World Bank.

What do the locals think about the refinery? In short, they seem grateful, or at least those who were picked for the company’s cameras. In a video produced by the project, three people from nearby towns thank God and the Chinese for building needed infrastructure. A man says, “We want to thank the refinery, first to God, and all the representatives of the refinery that signed a project for drinking water…that all my life we have been complaining about.” A woman in Liquiqui says, “First we were blessed by the mountains, but now we have water…without water we cannot live, we cannot cook, cannot do anything…” She thanks God too, and the Chinese, in that order. A man says that with the new health clinic people will no longer have to travel to the big city to see the doctor. He says that a new bridge will keep one community from being cut off every time it rains heavily.

Venezuela is also going to benefit from this project as well since they own 17% of the project. Their share was cut from 49% when the Chinese stepped in to provide the project a much-needed lift. Ecuador did not give up any of its 51% stake.

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