QUITO -- South Korea's SK Engineering and Construction has signed a deal with Ecuadorian state-owned oil firm Petroecuador to upgrade the Esmeraldas refinery, the Andean nation's largest.

The deal was signed in Quito by Petroecuador executive Edmundo Lertora and the vice president of the South Korean consortium, Doo Woong.

Also taking part in the signing ceremony as witnesses were Mining and Petroleum Minister Derlis Palacios; Petroecuador's CEO, Vice Adm. Luis Jaramillo; and the South Korean company's legal representative, Choi Du-Yon.

The deal, whose first phase has a budget of $83 million, aims to repair and remodel the refinery, which is located in northwestern Ecuador and has not operated at full capacity in recent years due to structural problems affecting some of its systems.

Petroecuador said the upgrading effort will begin immediately and is expected to take three years; the company added that once the work is finished the plant should be able to process 110,000 barrels of crude per day, 20 percent more than its present capacity.

The Esmeraldas refinery, located in the same-named Ecuadorian province, was built in 1977.

Ecuador also has two other refineries: La Libertad, near the Pacific coast in the country's southwest; and Amazonas, in the northeastern oil region.

But their combined capacity is insufficient to meet internal fuel demand and the country therefore must import gasoline, despite being the fifth-largest oil producer in the Americas.

For that reason, Petroecuador, in a joint venture with Venezuelan state oil giant PDVSA, is planning to build a huge refinery and petrochemical complex in the coastal province of Manabi with the capacity to process 300,000 barrels of crude per day.

Ecuador produces some 500,000 bpd of crude and oil export revenues finance nearly 35 percent of the central government's budget.