MEXICO CITY (AP) - The site for the largest Central American project since the Panama Canal could be designated this weekend when regional leaders meet to discuss plans for a US$6.5 billion multinational oil refinery, Mexico's energy secretary said Thursday.

Central America nations, along with Mexico, Colombia and the Dominican Republic, will weigh two proposed Pacific coast sites: Puerto Quetzal in Guatemala and Puerto Armuelles in Panama, Mexican Energy Secretary Fernando Canales told a news conference.
The refinery, with a capacity of 360,000 barrels a day, will be able to meet the energy needs of Central America's seven nations at US$8 less a barrel than the open-market prices, Canales said ahead of the weekend meeting in the Dominican Republic.

The refinery is the crux of the region's most sweeping energy project to date. It aims to reduce the region's dependence on foreign oil and keep skyrocketing gasoline prices in check.

Supported by the Inter-American Development Bank and the UN Economic Commission on Latin America and the Caribbean, the plan also includes a regional power grid and a natural gas pipeline, although details of those projects are still being hammered out.
Mexican Deputy Energy Secretary Hector Moreira estimated this week that the overall project could cost about US$10 billion.

Canales said Mexico's state oil monopoly Petroleos Mexicanos, or Pemex, will provide 230,000 barrels a day of crude to the refinery. Guatemala will provide 17,000 barrels a day, and Belize 8,000.
Whoever builds it would buy the other 105,000 barrels a day in the market, with options including Mexico, Ecuador, Peru, Venezuela, or Trinidad and Tobago, Canales added.

The refinery would supply fuel to Central America and southern Mexico at a discount of US$8 a barrel for up to 255,000 barrels of crude a day, while the rest would be sold in the region or exported elsewhere at market prices.
It will also help Mexico, which imports a quarter of its gasoline supply from the US and elsewhere.

Despite being the world's third-biggest crude producer, with average daily output of 3.35 million barrels this year, Pemex lacks the refining capacity to meet growing domestic demand for gasoline.

Pemex is a major supplier of crude to the US market, and most of the 1.8 million barrels a day it exports heads to refineries along the US Gulf Coast that specialise in processing heavy crude.

The need to diversify its customer base became clear for Pemex after hurricanes Katrina and Rita knocked almost all of the state company's overseas clients off-line for several weeks.

Canales also said Thursday he will meet in Mexico on Saturday with Saudi Oil Minister Ali Naimi. Naimi will fly to the Mexican state of Campeche from Caracas, Venezuela, where the Organisation of Petroleum Exporting Countries (OPEC) is meeting this week.

Regardless of OPEC decisions, nonmember Mexico will maintain its current oil production and export levels, Canales said.
Mexico, one of the top foreign suppliers of crude oil to the US, had cooperated with OPEC on oil supply agreements in the late 1990s, when producers were suffering from plummeting oil prices.

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