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Putin arrives in Venezuela to meet U.S. foes
Darya Korsunskaya and Anthony Boadle
CARACAS
Fri Apr 2, 2010 9:32am EDT
Factbox
Factbox: Russia's ties with Venezuela: arms, energy, politics
7:33am EDT
Venezuelan President Hugo Chavez (L) welcomes Russian Prime Minister Vladimir Putin at Simon Bolivar International airport in Caracas April 2, 2010. Putin arrived in Caracas on Friday to bolster energy and defense ties with Chavez and launch a $20 billion joint venture to tap the Orinoco heavy oil belt.
Credit: Reuters/Jorge Silva
CARACAS (Reuters) - Russian Prime Minister Vladimir Putin arrived in Caracas on Friday to meet the two main South American foes of the United States and launch a $20 billion venture to tap the vast Orinoco heavy oil belt.
World | Russia
Putin will discuss energy, agriculture and defense issues with Venezuela's leftist President Hugo Chavez and later hold talks with Bolivian President Evo Morales, both fierce critics of what they call U.S. "imperialism" in Latin America.
Putin and Chavez toured a four-masted Russian tallship, the Kruzenshtern, one of the world's largest sailing vessels used as a fishery school ship, and viewed photos of Russia's victory over Germany in the Second World War in the ship's museum.
Chavez said Moscow and Caracas would strengthen security ties to "continue increasing Venezuela's defense capability" and also look at cooperating on nuclear energy.
"We are not going to build the atomic bomb but we will develop nuclear energy for peaceful purposes. We have to prepare for the post-petroleum era," Chavez said at a cabinet meeting on Thursday evening.
Facing a national electricity crisis that has caused widespread power outages, Chavez's government is turning to Iran and Russia for help to develop nuclear energy.
Venezuela, South America's top oil exporter and a member of the OPEC oil producers' cartel, is seeking foreign investment and technology to tap its heavy crude deposits and loans to pay for Russian military hardware.
Since 2005, Venezuela has bought $4 billion worth of Sukhoi jet fighters, helicopters and Kalashnikov assault rifles.
Chavez received more than $2 billion in loans for more Russian weaponry during his eighth visit to Moscow in September, including tanks and the S-300 advanced anti-aircraft missile system.
U.S. Secretary of State Hillary Clinton expressed concern last year that the weapons purchases from Russia by Venezuela, a major oil supplier to the United States, could trigger an arms race across Latin America.
Chavez says the United States could attack Venezuela for its oil reserves and his growing arsenal is aimed at countering a planned increase in the U.S. military presence at bases in neighboring Colombia, Washington's closest ally in the region.
The arms contracts have been watched with concern by Colombia, which has stormy ties with Venezuela.
ORINOCO OIL VENTURE
A Russian Beriev amphibious plane designed to fight forest fires arrived on Thursday to help Venezuela extinguish blazes that have ravaged the drought-scorched Avila mountain overlooking Caracas.
The highlight of Putin's visit will be the creation of a joint venture between Venezuela's state oil company PDVSA and a consortium of Russian firms to tap the Junin 6 field in the Orinoco oil belt, which Venezuela says has the world's largest hydrocarbon reserves.
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 output.
Venezuela said on Wednesday the venture would begin producing 50,000 barrels a day by the end of the year.
The Russian companies involved in Junin 6 are state giant Rosneft, private major Lukoil, Gazprom, TNK-BP and Surgutneftegaz.
PDVSA holds a 60 percent stake in the project, and Caracas says the Russian firm will pay Venezuela a first tranche of $600 million on Friday -- out of an agreed total of $1 billion -- for the right to take part in the venture.
To boost its sagging output from traditional wells, Venezuela needs to exploit the Orinoco belt, where the oil requires considerable upgrading to turn it into lighter crude.
Putin's first visit to Venezuela, which is lasting just one day, is seen as part of an effort by Moscow to help Russian firms expand abroad and own oil assets all over the world.
Industry sources said Rosneft, Russia's largest oil producer, was seeking to buy stakes in four German refineries from Venezuela as part of the Kremlin's drive to encourage its companies' activities abroad.
Rosneft said on Friday it was in talks with PDVSA, but that there were no proposals to acquire its German assets.
(Additional reporting by Dmitry Zhdannikov in Moscow; Charlie Devereux in Caracas; Editing by Daniel Wallis and Alan Elsner)
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