UPDATE 2-Russia trumpets ties with Venezuela's Chavez

(Adds Chavez's meeting with Putin)

By Oleg Shchedrov

MEIENDORF CASTLE, Russia, July 22 (Reuters) - Russian President Dmitry Medvedev on Tuesday hailed closer relations with Venezuela's socialist leader Hugo Chavez, signing a raft of business deals bringing the two key oil producers and rivals of the United States closer together.

Arriving in Moscow earlier, Chavez pledged to pursue fresh arms purchases to "guarantee the sovereignty of Venezuela which is being threatened by the United States", but gave no details.

Medvedev and Chavez signed four deals between Russian oil companies and Venezuela's state energy firm PDVSA. These allow the Russians to develop new deposits in the South American country and pave the way for big infrastructure and engineering projects. Values were not disclosed.

Underlining the importance Moscow attaches to relations with its anti-American partner, Medvedev said he and Chavez would personally oversee a number of the key projects.

Russia, the world's No. 2 oil exporter, and OPEC member Venezuela also agreed to cooperateon global energy markets without hurting the interests of consumers, Medvedev added.

"Russia and Venezuela are two very important oil and gas powers and ensuring energy security depends on our concerted actions," Medvedev said after receiving Chavez at a state residence outside Moscow.

He also said the idea of creating an OPEC-like group for gas exports had not been fully abandoned. The idea has previously sent jitters across Europe and brought criticism from Washington, which said it could lead to price manipulations.

"We will take mutually coordinated and correct actions. Our cooperation is not targeted against third countries," the Russian leader said.

ROUBLE CHALLENGE TO DOLLAR

An emotional Chavez, shaking hands and exchanging smiles with Medvedev, echoed the Russian leader's idea of making the rouble a major reserve currency to challenge the dollar.

"The rouble must become a world currency," Chavez said. "We in OPEC have proposed to put an end to the dollar."

In an implicit slap at the United States, which traditionally considers Latin America its zone of influence, Medvedev signalled the importance Russia attaches to relations with Washington's main adversary in the region.

"Venezuela is now the most important partner of the Russian Federation," Medvedev said. "Our relations are a key factor of regional security."

"We have one common task -- to make the surrounding world more democratic, fair and secure."

Chavez later showed off his cordial ties with Russian leaders, giving Prime Minister Vladimir Putin a hearty hug and turning into a joke his late arrival at his residence.

"But this is not my fault -- he (Medvedev) speaks more than I do," quipped Chavez, known by his fiery and lengthy speeches.

"I did not remember, but as it turned out, he (Medvedev) was in New York during our very first meeting in the U.N. He reminded me about it," he told Putin, inviting him to Venezuela.

Putin stepped down as Russian president in May after serving eight years in office. Medvedev was elected president by a landslide after Putin asked voters to back his successor.

The closeness between Chavez and the Kremlin has alarmed Venezuela's neighbour Colombia, a close U.S. ally which had hoped to persuade Russia to adopt a balanced stance in the Andean region.

Rows over U.S. plans to station a missile shield in Europe and NATO's intention to expand into Ukraine and Georgia have hurt ties between Moscow and Washington in recent years and increased Russia's determination to seek allies to counter U.S. power.

Chavez, a former soldier who led an unsuccessful coup in the 1990s before later winning election, wants to rearm the Venezuelan army with Russian missiles, tanks and diesel submarines and has already bought billions of dollars worth of fighter jets, helicopters and Kalashnikov rifles.

Despite media reports that a big arms deal would be signed on Tuesday, a Russian government source said there was no guarantee anything would be finalised.

Chavez accuses Washington of planning a 2002 coup against him, while the United States accuses him of seeking out its enemies -- such as Iran and Cuba -- as allies.

For a separate story on energy deals signed on Tuesday click on [ID:L22984005] (Additional reporting by Denis Dyomkin) (Reporting by Oleg Shchedrov, Writing by Dmitry Solovyov and Michael Stott; Editing by Ralph Boulton)