Venezuela and Russia to create $ 4 bn joint development bank

Nov 09, 2008 01:00 AM

Venezuelan and Russian officials have agreed to create a $ 4 bn joint development bank to finance gas production, aluminium mining and other projects, Venezuela's information ministry said. It was not clear how much each energy-rich country would contribute as oil and gas prices continue to slide, but Venezuelan President Hugo Chavez said his country could tap its foreign currency reserves to bankroll the fund.
"Russia and Venezuela are establishing a strategic alliance," Chavez said as he and Russian Deputy Prime Minister Igor Sechin mingled with workers from the nations' two state-run oil and gas companies on a drilling platform in the Gulf of Venezuela.

The men inaugurated the first Venezuelan-Russian offshore natural gas project, with Chavez hailing his country's increasingly close ties to Russia as a counterweight to US influence. Venezuela has South America's largest natural gas reserves, including 27 tcf in the Gulf of Venezuela, but they've remained largely untapped while the countryfocused on oil. Russia's state gas company Gazprom won a contract to develop two Venezuelan natural gas blocks in 2005 and is expected to start producing there by 2013.
Russian oil companies have been invited to drill in the Orinoco River Basin, which is considered the world's largest-known single oil deposit with up to 1.2 tn barrels. They may also build a $ 6.5 bn refinery to process Venezuela's extra-heavy crude, helping the South American country wean itself off the US refineries it now relies on.

Ties between Caracas and Moscow have blossomed under Chavez, with Venezuela buying more than $ 4 bn in Russian weapons since 2005.
Russian President Dmitry Medvedev is scheduled to visit Venezuela later, when Venezuelan and Russian naval fleets hold joint exercises on the Caribbean Sea.

Source / The Associated Press
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