Russian media reports claim new contracts for Russian submarines and tanks may be discussed during Venezuelan president's visit.
By JERUSALEM POST STAFFPublished: SEPTEMBER 9, 2009 19:45Advertisement
Venezuelan President Hugo Chavez is set to arrive in Russia on Wednesday on a visit expected to focus on energy issues and military cooperation.
Russia has forged close ties with Venezuela as part of efforts to expand its global clout and counter US influence in Latin America.
Venezuela hosted Russian warships and bombers for joint maneuvers last fall, and has become a leading customer for Russian arms makers. It has purchased more than $4 billion in Russian weapons since 2005, including Sukhoi fighter jets, helicopters and 100,000 Kalashnikov rifles.
Russian media reports claimed that new contracts for Russian submarines and tanks may be discussed during Chavez's visit, which includes meetings with Russian President Dmitry Medvedev and Prime Minister Vladimir Putin.
Medvedev's spokeswoman Nataliya Timakova said no weapons deals were expected to be signed after the talks, but Kremlin foreign affairs adviser Sergei Prikhodko told reporters that Russia and Venezuela were to sign an agreement on military cooperation.
The document envisions training military personnel and exchanges of information, he said.
The talks also will likely focus on energy projects, such as a plan to jointly develop a huge oil deposit in Venezuela's Orinoco River region.
A consortium of several Russian oil majors including Lukoil and TNK-BP are going to team up with Venezuelan national oil company Petroleos to develop one block of the huge oil field in the Orinoco River Basin, which has been recognized as the world's single-largest oil deposit, potentially holding 1.2 trillion barrels of extra-heavy crude.
While financing would come from the Russian consortium, the Kremlin is to support the venture by creating a Russian-Venezuelan bank and providing necessary equipment.
Vagit Alekperov, chief executive of Lukoil said earlier that the deal could be signed during Chavez's visit, but the Russian government point man in charge of relations with Venezuela, Deputy Prime Minister Igor Sechin, wouldn't confirm that Wednesday.
Prikhodko said Wednesday that the two presidents would oversee the signing of an infrastructure deal between Petroleos and Russian pipeline monopolist Transneft for oil projects in the Orinoco River Basin. He made no mention of the deal with the Russian investors' consortium, however.
Prikhodko also indicated that Russia would not immediately push forward with earlier-planned ambitious pipeline projects in Venezuela.
Shirvani Abdullayev, an oil and gas analyst at Alfa Bank in Moscow, said that the Russians are still very cautious about the Venezuelan projects.
"The terms of the deal are still unclear, and it's unclear whether producing in Venezuela is going to be more profitable than in Russia."
As a sign of such caution the Russian companies are forming a consortium aimed to spread out the risks.
"No one wants to take on leadership or risks," Abdullayev said. "If the projects were truly commercially attractive, we would see one company taking up one oil field and all the obligations."
In the gas sector, the first Venezuelan-Russian offshore project in the Gulf of Venezuela was inaugurated in November to start producing gas within four to five years. The Gulf of Venezuela is home to 27 trillion cubic feet of gas.
Venezuela has South America's largest natural gas reserves, but they have remained largely untapped while the country has focused on oil production.
Chavez is on a world tour, taking in several continents.
On Wednesday, Chavez ended a two-day visit to former Soviet Belarus, where he and his Belarusian counterpart Alexander Lukashenko struck a range of agreements including a memorandum on energy co-operation.
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