Russia, Venezuela sign oil and gas deals

[September 26, 2008]  MOSCOW (AP) -- Russia and Venezuelan officials agreed Friday to bolster cooperation in the oil and gas industry, the latest sign of strengthening ties between two nations trying to decrease U.S. influence around the world.

Venezuelan President Hugo Chavez and Russian President Dmitry Medvedev watched the signing of deals between state energy companies in the southern city of Orenburg.

Chavez also was expected to watch a major Russian military exercise during his second visit to Russia in just over two months.

Russia has signed contracts worth more than US$4.4 billion (euro2.99 billion) with Venezuela since 2005 to supply arms including fighter jets, helicopters, and 100,000 Kalashnikov assault rifles. The Kremlin said Thursday that Russia is granting Venezuela a US$1 billion (euro0.68 billion) credit for the purchase of Russian weaponry.

The arms purchases have sparked concern in the U.S. and among some neighbors of Venezuela, such as Colombia, which has accused Venezuelan officials of supporting leftist insurgents.

The CEO of Russia's state gas monopoly OAO Gazprom and the president of state energy company Petroleos de Venezuela SA, or PDVSA, signed a memorandum of understanding that Gazprom said allowed for greater cooperation between the companies.

The energy ministers signed a separate memorandum calling for the establishment of a body that would oversee broader cooperation in oil and gas between the energy-rich nations.

Gazprom has invested US$100 million (euro68.03 million) in Venezuela, Gazprom chief Alexei Miller said on Vesti-24 television after the signing.

He said agreement to create a consortium linking PDVSA with Russia's top oil and gas companies was in the works and could be signed in the coming months, with Gazprom likely leading the Russian side.

Chavez is on a trip that has taken him to Cuba and China along with Russia, whose war with U.S. ally Georgia has badly soured relations with Washington.

A Russian naval squadron is on its way to Venezuela, and Russia sent two strategic bombers there earlier this month. The Western Hemisphere deployments are a pointed response to the U.S. use of military ships to bring aid to Georgia and aspects of what the Kremlin casts as threatening U.S. encroachment near its borders.

[Associated Press; By STEVE GUTTERMAN]

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