Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Sept. 16 -- Iran and Ecuador, both members of the Organization of Petroleum Exporting Countries, signed a memorandum of understanding in the oil sector under which Iran will help refurbish and upgrade Ecuador's refineries.

The MOU, signed in Tehran by Iranian oil minister Gholam Hossein Nozari and Ecuadoran minister of mines and petroleum Galo Chiriboga Zambarno, calls for the construction of an oil refinery to be co-financed by Iran, Ecuador and fellow OPEC member Venezuela.

Nozari said the two oil ministers additionally agreed to construct a petrochemical production unit in Ecuador, while Zambarno said the two countries would establish an oil company to implement the joint energy projects.

Their agreement also covers training of Ecuador's oil industry employees by Iranian experts and cooperation in maintenance on Ecuadorean oil facilities.

Ecuador, the fifth largest oil producer in South America, currently has three refineries with a combined capacity of 176,000 b/d. The largest refinery in Ecuador is the 110,000 b/d Esmeraldas facility on the Pacific coast.

According to the US Energy Information Administration, Ecuador is a net importer of refined oil products: during the first half of 2007, Ecuador's Ministry of Energy and Mines said the country imported 86,000 b/d of refined products, while exporting 36,000 b/d.