Putin bolsters oil, defence ties with Venezuela

CARACAS (Reuters) - Russian Prime Minister Vladimir Putin gave the United States' main Latin American foe, Venezuelan President Hugo Chavez, a needed boost with a brief visit on Friday to discuss oil, defence and nuclear energy cooperation.


Venezuela's President Hugo Chavez (R) welcomes Russia's Prime Minister Vladimir Putin at Miraflores Palace in Caracas April 2, 2010. They launched a $20 billion venture between Russian firms and Venezuelan state company PDVSA aimed at pumping 450,000 barrels a day -- almost a fifth of the OPEC member's current output -- from the vast Orinoco heavy oil belt.

Russia also delivered the last four of 38 military transport helicopters, but no new defence agreements were signed, though Chavez said Moscow was open to help Venezuela develop nuclear energy for generating electricity.

"We are prepared to begin drawing up the first project for a nuclear power generator, obviously for peaceful purposes," Chavez said at a news conference with Putin.

"We are not building an alliance against the United States. We don't care what Washington thinks," Chavez said, adding that he would continue to make "modest" arms purchases from Moscow that were the minimum needed for Venezuela's defence.

Putin's 12-hour visit provides a welcome lift for Chavez, who is facing domestic and international criticism for failing to solve Venezuela's economic woes and attempting to silence opposition to his 11-year rule.

Putin also held talks in Caracas with Bolivian President Evo Morales, along with Chavez the fiercest opponent of what they call U.S. "imperialism" in Latin America.

Facing a national electricity crisis that has caused widespread outages, Chavez's government is turning to Iran and Russia for help to develop nuclear power.

Venezuela, South America's top oil exporter and a major U.S. supplier, has also expanded military ties with Russia under Chavez, who says the United States could attack Venezuela for its oil reserves.

Since 2005, Venezuela has bought about $5 billion worth of Sukhoi jet fighters, Mi-17 helicopters and Kalashnikov assault rifles. Chavez received $2.2 billion in credit lines for more Russian arms during his eighth visit to Moscow in September, including T-72 tanks and the S-300 advanced anti-aircraft missile system.

U.S. Secretary of State Hillary Clinton expressed concern last year that the Russian weapons purchases by Venezuela could trigger an arms race across Latin America.

Chavez says his growing arsenal is aimed at countering a planned increase in the U.S. military forces at bases in neighbouring Colombia, Washington's closest ally in the region.

ORINOCO OIL VENTURE

The highlight of Putin's visit was the rolling out of the joint venture to develop the Junin 6 field in the Orinoco, which will require $20 billion in investments over 40 years.

Venezuela expects the venture to begin producing 50,000 barrels a day by the end of the year.

To boost its sagging output from traditional wells, Venezuela needs foreign investment and technology to tap the heavy oil of the Orinoco belt that requires much upgrading to turn into lighter crude.

The Russian consortium involved in Junin 6, state giant Rosneft, private major Lukoil, Gazprom, TNK-BP and Surgutneftegaz, paid Venezuela the first $600 million tranche of an agreed $1 billion signing fee on Friday.

PDVSA holds a 60 percent stake in the project. The Russian firms are also in talks to create joint ventures to develop three more Orinoco blocks, Junin 3 and Ayacucho 2 and 3.

Chavez hopes Russian cooperation will reach as far as the space industry. "We could even install a satellite launcher," he said at a televised cabinet meeting on Thursday.

The U.S. State Department scoffed at Chavez's space plans, pointing out that Venezuela was so short of electricity the government had extended the Easter holiday for a full week.

"Perhaps the focus should be more terrestrial than extraterrestrial," said spokesman P.J.Crowley.