PREVIEW-Putin Venezuelan trip to focus on energy, arms

Wed Mar 31, 2010 6:41am EDT

Related Topics

* Moscow can afford to lend money as energy prices strong

* Russian firms' domestic growth limited by Kremlin

* Venezuela wants to beef up its weaponry

By Darya Korsunskaya

MOSCOW, March 31 (Reuters) - Russia will cement energy ties with its closest Latin American ally, Venezuela, when Prime Minister Vladimir Putin travels to Caracas this week for a trip that could also lead to arms deals that worry Washington.

Venezuela, South America's top oil exporter and a member of the oil producers cartel OPEC, is seeking funds and technology to help develop its oil deposits and is also seeking loans to buy Russian military hardware.

"We should expect a lot of big arms and energy contracts. When Putin has travelled recently to centres like India he brought back a lot," said Fyodor Lukyanov, editor of the magazine Russia in Global Affairs.

"It is always a good chance for Putin to show to the United States that we have a lot a friends all over the world."

Putin secured $10 billion in energy, nuclear and arms deals in India this month and Russia is offering New Delhi a role it its energy projects, Russian military hardware and its nuclear reactors, amid rising competition from French and U.S. firms. [ID:nSGE62B0B8] [ID:nSGE62B0B8]

"It is an opportunity to advance cooperation in the fields of energy, industry, agriculture and defence, among others," Venezuela's foreign ministry said ahead of the visit. Putin's office was due to comment on the visit later in the week.

Chavez travelled to Moscow in September to receive over $2 billion in loans for weaponry, including tanks and the S-300 advanced anti-aircraft missile. [ID:nLA719656]

During the trip he announced Venezuela recognised two pro-Russian rebel regions of Georgia as independent states, a rare diplomatic success for Moscow, which has tried unsuccessfully to persuade its allies to do so.

U.S. Secretary of State Hillary Clinton has called Russian, Iranian and Chinese economic and political gains in Latin America disturbing after failed attempts by the previous U.S. administration to isolate Venezuela and Bolivia. [ID:nN01364341]

Clinton also expressed concern last September about Venezuelan arms purchases and their potential for triggering an arms race in the region. [ID:nN1571529]

ENERGY RELATIONSHIP

Venezuela wants to beef up its arsenal to resist what Chavez terms U.S. imperialism in Latin America, though tensions have also been rising with neighbouring Colombia, a close U.S. ally and historic rival of Venezuela.

"Russia sees the strengthening of its positions in this region as an extremely important and a good answer to the widening U.S. influence in Central Asia," said Alexei Mukhin, who directs the Moscow-based Centre for Political Information.

In February, a consortium of Russian firms and Venezuela's state-run PDVSA agreed to set up a venture to tap the Junin 6 oil field in the Orinoco oil belt, which Venezuela says has the world's largest hydrocarbon reserves [ID:nLDE6102FC].

The development will require $20 billion in investments over 40 years to produce 450,000 barrels per day, or almost a fifth of Venezuela's current oil production, and will involve state giant Rosneft (ROSN.MM) and private major LUKOIL (LKOH.MM).

Valery Nesterov, analyst at Troika Dialog brokerage, said private Russian firms were struggling to expand on home turf because of limited access to big deposits and tax uncertainty.

"In Venezuela the geology is good, reserves are great. From that point of view, the conditions are ideal there, though this does not, of course, remove concerns about political risk."

Chavez, who says the United States could attack Venezuela for its oil reserves, has also said Moscow and Tehran are helping Venezuela develop its nuclear energy production -- but not an atomic bomb -- to confront a power crisis.

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.