Chavez says will build oil refinery for Nicaragua

MANAGUA, Jan 12 (Reuters) President Hugo Chavez said Venezuela will build an oil refinery in Nicaragua able to process up to 150,000 barrels of oil per day to help new President Daniel Ortega ease high fuel costs.

The plan was first announced last year by Nicaragua's new energy company Albanic, a joint venture between No. 5 oil exporter Venezuela and municipalities then in the hands of former Marxist rebel leader Ortega's Sandinista Party.

Chavez, a US foe who arrived in Managua on Wednesday for the leftist president's inauguration, yesterday said the plant would end Nicaragua's energy woes.

''With God's help Nicaragua will not have any more fuel problems,'' Chavez said during a meeting with Ortega, who won the presidential election in November after nearly 17 years in opposition. He led the Sandinista revolution in 1979 and remained in power until voters threw him out in 1990.

Chavez also said gas from a pipeline being built between Venezuela and Colombia and which he plans to expand to Panama, should also be available to Nicaragua.

Nicaragua, one of Latin America's poorest countries, generates 80 per cent of its electricity from oil-derived fuel, and high world oil prices have caused an energy crisis that frequently blacks out large parts of the country.

The refinery project is one of a string of deals Chavez has made with friendly nations across Latin America and the Caribbean to counter US influence in the region.

Chavez said the refinery would be majority-owned by the Nicaraguan government, with Venezuela a minority owner.

He said that after Nicaragua had refined enough oil to satisfy internal demand, it could export the fuel elsewhere for cash, weaning itself off International Monetary Fund loans.

Ortega says he wants to maintain good relations with Washington while working closely with Chavez.

A day after confirming Nicaragua would stay in a Central America-wide free trade agreement it recently joined with the United States, Ortega announced he was also joining ALBA, Chavez's alternative accord grouping leftist allies like Cuba.

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