Cablegate: Honduras in Strong Support of Energy Integration

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS TEGUCIGALPA 002529

SIPDIS

SENSITIVE

STATE FOR WHA/CEN, WHA/EPSC, EB/ESC
ENERGY FOR IA

E.O. 12958: N/A
TAGS: EPET ENRG EINV ECON VE HO
SUBJECT: Honduras In Strong Support of Energy Integration
Project

REF: MEXICO 07368

1. (U) Honduras is very interested in the Energy Integration
Project proposed by Mexico, according to Honduran Trade and
Commerce Minister Irving Guerrero. Per reftel, Mexico has
proposed the construction of a Central American energy
initiative that includes a 230 thousand barrel per day (bpd)
refinery, a regional electrical grid, and an LNG (Liquefied
Natural Gas) regasification system and pipeline. The
project would include Mexico, the six Central American
countries (Guatemala, El Salvador, Honduras, Nicaragua,
Costa Rica, and Panama), the Dominican Republic, and
possibly Colombia.

2. (SBU) Guerrero expressed the most interest in the
regasification plant and pipeline, which he said had the
best possibility of lowering costs in Honduras. "There is
virtually no gas used in Honduras right now. Not only does
it represent lower costs than petroleum-based fuel, it has
the ability to create new industries in areas like glass and
iron." Gas also has the ability to lower costs for the
national electric company ENEE, he said, which relies on
petroleum sources for 70% of its power generation.

3. (SBU) The refinery also holds significant interest for
Honduras, Guerrero said, and identified Honduras' southern
port of San Lorenzo (on Honduras' Gulf of Fonseca on the
Pacific coast) as the best site. "It's close to Mexico's
center of heavy Maya crude, the Inter-American highway, and
three countries." The Gulf of Fonseca is shared by
Honduras, El Salvador, and Guatemala, an area that could
easily become an "energy free trade zone", per Guerrero. He
believes that all three countries would support the
location, pending the results of an independent analysis. A
southern location would also remain far from Honduras'
tourism-heavy north coast. (Note: Post had previously
heard that San Lorenzo is too shallow to permit deep-draft
crude tankers to dock, and will follow with interest the
findings of the proposed site analysis. End Note.)

4. (SBU) In discussing a possible U.S. role, Guerrero said
he believed that the proposed refinery, at 230 thousand bpd,
is too small, and would only cover existing Central American
requirements in the near future. "This refinery would use
Mexico's heavy Maya crude to produce low sulphur gasoline;
the U.S. is quickly moving to a low sulphur standard. A
larger refinery, maybe twice as large, could successfully
connect the southeastern U.S. with this initiative."
Guerrero identified U.S. investment as necessary to scale up
the size of the proposed refinery. (Note: In separate
discussions with a U.S. consultant hired by the Honduran
Congress to assess petroleum policies and pricing in
Honduras, Post was told that for a refinery to be
competitive in today's market, it must have a capacity of at
least 500,000 bpd, closely mirroring Guerrero's remark. End
note.)

Ford

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