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Russia and Venezuela clinch energy deals

Latest update : 2008-07-25

Venezuelan President Hugo Chavez is in Russia to discuss arms deals and energy policies with his counterpart Dmitry Medvedev. On Tuesday, Medvedev announced that Russian companies, Gazprom, Lukoil and TNK-BP, would work in Venezuela.

Leading oil and gas producers Russia and Venezuela will coordinate energy policies, Russian President Dmitry Medvedev said Tuesday after meeting his Venezuelan counterpart Hugo Chavez.

The talks at Medvedev's residence outside Moscow included discussion of arms deals and resulted in an agreement for three Russian companies -- Gazprom, Lukoil and TNK-BP -- to work in the energy-rich Orinoco Belt in Venezuela.

"Russia and Venezuela are oil and gas powers and energy security depends on our combined actions. We will work on coordination but our cooperation is not aimed against third countries," Medvedev said after the talks.

"It is mutually advantageous and is not only our countries but also those who cooperate with us who will benefit from this cooperation," he added.

Medvedev, a former chairman of Russian gas giant Gazprom, added that a proposal to create a group of leading gas producers that would mirror the Organisation of the Petroleum Exporting Countries (OPEC) was "not closed."

Iran and Venezuela, members along with Russia of the Gas Exporting Countries Forum, have both supported the idea of creating a "gas OPEC." Russia is by far the world's largest gas producer, controlling a quarter of global reserves.

The prospect of a gas OPEC has raised fears in the European Union and the United States of a possible cartel. Energy analysts have generally dismissed the prospect because of differences between the oil and gas businesses.

"Russia and Venezuela must become strategic allies in the oil sphere and in military-technical cooperation," Chavez was quoted by RIA Novosti news agency as saying upon his arrival in Moscow on Tuesday.

"This will guarantee the sovereignty of Venezuela because we are now threatened by the United States," he added.

Earlier, a Russian arms industry source told Interfax that Venezuela was planning to buy 20 Tor-M1 air defence systems and three submarines for a total value of one billion dollars (630 million euros).

Moscow and Caracas have already signed four billion dollars (2.5 billion euros) worth of arms contracts in recent years including Kalashnikov assault rifles and military helicopters, Rosoboronexport said.

At the meeting with Medvedev, Chavez stressed his agreement with Russia's outlook on global affairs by passing on warm greetings and a message from his ally, veteran Fidel Castro.

"Fidel and many other friends in Latin America have asked me to greet you," Chavez told Medvedev.

"Fidel speaks of a crisis of reason, especially in the most powerful countries. Russia has restored this reason," he said.

He then held talks on arms deals with his "friend" Prime Minister Vladimir Putin and the head of Russia's arms export monopoly, Sergei Chemezov.

"I want to thank you for the steadfast support you have given us," Chavez said as he greeted Putin.

Putin noted that Moscow wanted to "diversify" its economic relations with Venezuela "in every direction."

The two leaders also discussed "co-operation" in the military-technical field, Putin spokesman Dmitry Peskov said after their meeting.

Chavez said Venezuela would continue to develop its military co-operation with Moscow.

At a news conference carried live on Russian television, Chavez said the two sides were jointly working on creating an air defence system.

"We are going full sail," he said.

Chavez's visit to Russia is the first leg of a European tour that will take in Belarus, Portugal and Spain. In Spain, Chavez has said he will hug King Juan Carlos following a spat last year in which the king told him to shut up.

Date created : 2008-07-23