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