Venezuela, Libya discuss reviving Cuban refinery

Venezuelan and Libyan oil officials have discussed the viability of investing in an idle Soviet-built Cuban oil refinery, although the project was previously rejected by Venezuela, the head of the South American country's state oil firm said on Wednesday.

Petroleos de Venezuela (PDVSA) President Ali Rodri-guez said experts from his company had shared information with visiting Libyan National Oil Company officials about the Cienfuegos refinery, located on Cuba's south-central coast.

"The Libyan side was interested in receiving the information that we had," Rodriguez said.

He added the Libyan delegation, which had held two days of consultations with PDVSA in Caracas, had flown on to Cuba on Tuesday to continue their study of the Cienfuegos project.

Venezuela, the world's fifth largest oil exporter and a supplier of oil to Cuba, had previously discussed with the communist-ruled island the possibility of investing in the refinery, which has an estimated annual capacity of 3 million tonnes.

The installation was all but finished in 1991, when the Soviet Union collapsed, but has never gone into production.

Rodriguez said PDVSA had concluded at that time that a modernisation project was not viable.

"I don't know if the Libyan side might be interested in making an investment and modernising the refinery," he added.

This would involve "considerable investments" which PDVSA had not been ready to make in the past, Rodriguez said.

Analysts say the Cienfuegos refinery is believed to require at least a $200 million investment to begin some operations.

Rodriguez said PDVSA was ready to continue sharing information with the Libyan oil company about this subject.

"We'll study the situation on a concrete basis and we'll take a positive or negative decision as the case might be," he said.

Since he won election in the world's fifth largest oil exporter in late 1998, Venezuela's left-wing president Hugo Chavez has moved to strengthen economic and political relations with other oil-producing states both inside and outside the Organisation of Oil Exporting Countries (Opec) group.

These increased Venezuelan ties with Libya, Iraq and Iran have irritated the United States, the biggest single buyer of Venezuelan oil, which categorises these three nations as sponsors of "terrorism" and hostile to U.S. interests.

Chavez, who in April survived a short-lived coup by rebel military officers opposed to his policies, has also boosted Venezuelan ties, including oil supplies, with Cuba, which is the target of a long-running U.S. trade embargo.

Havana and Caracas anno-unced on Monday that Venezue-lan oil shipments to the island, which had begun in 2000, would be resumed at the start of August after a four-month suspension.

The supply of up to 53,000 barrels per day on favourable financing terms was suspended in April during a short-lived coup against Chavez by rebel military officers who opposed his left-leaning policies and ties with communist Cuba.

After Chavez returned to power, Venezuela's PDVSA said the shipments had not been restarted because Cuba had fallen behind in its payments. This had forced the cash-strapped island to buy oil on the spot market at higher prices.

"Up until April 11, Cuba was up to date with its payments. There was an interruption to the shipments and an interruption to the payments, and that is what we have been negotiating," Rodri-guez said, confirming supplies would resume from August 1.

The Venezuelan-Libyan talks about the Cienfuegos refinery followed media reports a month ago that Chavez's government was seeking a $5 billion bridging loan from Opec partner Libya to help it survive a domestic budget crisis.