RUSSIA and Venezuela have signed an energy pact to bolster co-operation in their respective oil and gas industries, bolstering energy ties between two countries trying to decrease US world influence.
Hugo Chavez, the Venezuelan president, and Dmitry Medvedev, the Russian president, yesterday watched as their energy ministers sealed the deal in Orenburg, near Kazakhstan's border, and home to Russian oil industry facilities.
The chief executi
ve of Russia's state gas monopoly, OAO Gazprom, and the president of state energy company Petroleos de Venezuela SA (PDVSA) signed a memorandum of understanding calling for establishment of a consortium to oversee broader co-operation in oil and gas between the energy-rich nations.
Alexei Miller, Gazprom chief, said after the signing that the firm had invested $100 million in Venezuela. Gazprom will launch its first drilling rig in late October to tap Venezuela's offshore gas reserves.
Mr Chavez boasted that the consortium "will be the biggest oil consortium on the planet" and added that Venezuela plans to sign an agreement with Russia for a joint bank. A $6.5 billion refinery to process Venezuelan crude oil is also on the cards.
Russian oil firms have also struck agreements with PDVSA to jointly explore several Orinoco river basin fields.
Industry experts have voiced initial scepticism about the significance of the plans. Chirvani Abdoullaev, chief oil and gas analyst at Russia's Alfa Bank, said it made little commercial sense, and that the countries lack the resources and know-how to bid for global dominance.
He said: "As for the development of Venezuelan heavy crude oil, none of the Russian companies has adequate technologies to offer. Why would you go to Venezuela instead of developing your own industry to the world level? We should focus on the tasks we have down here."
Observers believe the main reason for the energy pact is that it draws Moscow closer to Washington's most ardent Latin American foe.
Famed for his anti-US rhetoric, Mr Chavez has said that Venezuela and Latin America as a whole need "friends like Russia" to help them shed US "domination" and ensure peace, while Russia has ramped up its co-operation with Caracas further since last month's war with Georgia, which has badly damaged Moscow's already strained ties with the West and particularly the US.
Mr Chavez reiterated Venez-uela's "full, modest but very firm support for the actions Russia took" in Georgia but stopped short of recognising South Ossetia and breakaway Abkhazia as nations.
On Thursday, prime minister Vladimir Putin greeted Mr Chavez and vowed to make relations with Latin America a top priority.
He also gave an undertaking that Russia would consider helping Venezuela develop nuclear power plants. Mr Chavez thanked Mr Medvedev for sending two TU-160 bombers to Venezuela and took a swipe at Washington.
"Although someone there in the north of our continent said that those were obsolete airplanes, we were delighted by these aircraft.".
The full article contains 494 words and appears in The Scotsman newspaper.
