Rafael Correa, the Ecuadorian president, and Hugo Chavez, his Venezuelan counterpart, have entered into an agreement to build the biggest oil refinery on South America's Pacific coast.

The refinery plan announced on Tuesday will go up in El Aromo, 250km from Quito, the Ecuadorian capital, and should be ready by 2013.

"Instead of having refineries in the United States, we decided to keep them here in our geopolitical context," Chavez said.

Chavez hopes to wean Venezuelan crude away from the US, where Venezuela currently runs seven refineries.

Correa said that the joint $6.6 billion project by state-run oil firms from both countries will save Ecuador $3 billion in oil imports a year.

Venezuela and Ecuador are the only Latin American members of the Organisation of the Petroleum Exporting Countries.

Future plans

Chavez said he plans to build other refineries in Brazil and Nicaragua.

"Everything ended up in the United States; that's what the empire and colonialism are all about," Chavez said.

Chavez said his goal was to provide "energy security for all the people in the (South American) continent."

He also proposed building a joint steel plant in Ecuador and help it improve its telephone service.

Correa said Chavez's plans were not motivated by "interest" or a desire to interfere in his neighbours' affairs, but by a feeling of solidarity and his belief in the "Latin American Union".