• Costa Rica Real Estate

Resignation the latest chapter in a troubled refinery project

June 21, 2013

RECOPE President Jorge Villalobos handed in his resignation on Thursday in the latest setback for the protracted expansion. The troubled refinery project on the northern Caribbean coast has sputtered forward since it was announced in 2007, coming under increased scrutiny after Chinese President Xi Jinping’s visit to Costa Rica early in June.

Plans to upgrade the aging refinery were announced when then-President Oscar Arias visited China in 2007 after his administration said it would no longer recognize Taiwan.

In 2008, the government ordered environmental impact and feasibility studies for the new refinery, and in 2009, RECOPE and the China National Petroleum Corporation (CNPC) formed a 50-50 partnership called the Chinese-Costa Rican Reconstruction Corporation (SORESCO) to build and finance the refinery, according to RECOPE.

After years of debate over how the project would be financed, the Chinese Development Bank Corporation announced it would put up $900 million toward the project’s estimated $1.5 billion price tag in 2012. The remainder would be split between RECOPE and the Chinese National Petroleum Corporation, according to AmeilaReuda.com.

Villalobos was not the first to slip on the refinery upgrade. Monica Araya, a former consultant for the Environment Ministry (MINAE), was allegedly fired for speaking out against the project, according to ClimateWire. Opposition lawmakers are also calling for Environment Minister René Castro to step down over the affair, reported Costa Rica’s Radio Monumental.

RECOPE has already spent $50 million on the estimated $1.5 billion project, according to crhoy.com.

RECOPE argues that the country needs to replace the aging facility to reduce Costa Rica’s energy dependence and domestic gasoline prices. The state-run company claims the project will save the country $2 billion in annual oil costs and increase the facility’s capacity from 25,000 to 60,000 barrels, reported EFE.

A statement from RECOPE also claims the project would generate 2,000 construction jobs in Limón and another 3,000 indirectly. The facility would have a full-time staff of 700.

An environmental impact study accepted by the National Technical Secretariat of the Environment Ministry (SETENA) in October 2012 found that the project would have “minimal” impact on the surrounding area, according to RECOPE.

Environmentalists disagree. They claim the new refinery takes Costa Rica in the wrong direction and will do little to contribute to the country’s goal to become the world’s first carbon-neutral country by 2021. SETENA came under fire from green groups for allegedly ignoring environmental concerns in favor of the project, approving its construction based on RECOPE’s provisional plans and without a required cost-benefit analysis, according to TV’s Channel 7 and crhoy.com.

Castro said the company has six months to present an alternative plan that includes a new feasibility study and the possibility of incorporating biofuels, reported the daily La Nación.

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