Costa Rica cancels $1.2 billion Chinese refinery project

April 14, 2016

Costa Rica’s National Oil Refinery (RECOPE) has canceled a $1 billion-plus oil refinery project, according to a statement released Thursday afternoon.

The joint venture project was supposed to be a symbol of Chinese-Costa Rican cooperation when it was first announced nine years ago, but the beleaguered project has been plagued with scandals.

RECOPE President Sara Salazar told reporters that the joint Chinese-Costa Rican Reconstruction Corporation (SORESCO) cost the Costa Rican government ₡33 billion — more than $61 million — with nothing to show for the effort, according to Radio Monumental.

In January 2015, the project appeared to have new life. Salazar announced there would be a new feasibility study and there was talk of refining biofuels at the facility in Moín, Limón. But both sides could not come to an agreement.

President Luis Guillermo Solís said that he supported the RECOPE board of directors’ decision. Solís said that attempts to renegotiate the terms of the contract, originally agreed to by former President Laura Chinchilla’s administration (2010-2014), were unsuccessful.

RECOPE and the China National Petroleum Corporation formed the 50-50 SORESCO partnership to build and finance the refinery. The Chinese Development Bank agreed to loan $900 million of the $1.2 billion to Costa Rica for the project. RECOPE was supposed to be responsible for financing the remaining $300 million.

SORESCO was one of the first projects announced between the governments of Costa Rica and the People’s Republic of China after the two countries established diplomatic relations in 2007, during the administration of Óscar Arias (2006-2010).

The refinery project was suspended in 2013 after a Comptroller General’s Office investigation determined that a conflict of interest in the environmental impact study violated the terms of the agreement. Huanqiu Contracting & Engineering Corp., the company that conducted a feasibility study of the project, was a subsidiary of the China National Petroleum Corporation.

Since then, SORESCO has been a joint-venture zombie. RECOPE has not refined petroleum in Costa Rica since 2011.

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