26.09.2008 Russia, Orenburg. Venezuela's President Hugo Chávez, left, saw his Russian counterpart Dmitry Medvedev for the second time, but talked with him like with an old pal.
Photo: Alexander Miridonov
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Hugo Chávez’ Rating Soared a Billion
// Relations with the ally secured by an oil and gas deal and a military credit
Dmitry Medvedev and Hugo Chávez negotiated a consortium
Yesterday Venezuela's President Hugo Chávez finished his visit to Russia meeting with Russia’s President Dmitry Medvedev in Orenburg, and with Prime Minister Vladimir Putin in Moscow. The parties agreed to establish an oil and gas consortium between five Russian companies headed by Gazprom and Venezuela's PDVSA, which will operate not only in Venezuela but also in Latin American countries which have friendly ties with Moscow. According to the information of Kommersant, these agreements will take shape in the near future during the President and Prime Minister’s planned visit to Caracas.
Hugo Chávez started his visit to Russia with coming to Vladimir Putin’s residence of Novo-Ogaryovo, where he arrived on Thursday night. Mr Putin welcomed the guest saying that Moscow is eager to cooperate with Caracas in nuclear energy and other spheres. Then Venezuela's leader set off for Orenburg, where Russian President had already been waiting for him.
Hugo Chávez and Dmitry Medvedev tried to demonstrate friendship although the Russian President had seen his Venezuela's counterpart only once, at the end of July. They called each other by names or “President and Friend”. Dmitry Medvedev thanked Hugo Chávez for welcoming the Tupolev Tu-160 bombers, for his agreement to organize joint military and naval drills, and for his support during the war in Georgia. “I would like to take the chance and confirm our full, perhaps not that vital but strong support for all Russia’s actions in the Caucasus. We all know pretty well what the grounds for the conflict were. We know how the peaceful people of South Ossetia was attacked,” Venezuela's President said in response. He added that the Castro brothers, comrade Hu and even Vladimir Putin asked to be remembered to Mr Medvedev. “Thanks a lot for it,” the Russian President replied, and the leaders left for talks.
As to concrete results of the negotiations, several agreements were signed, including a memorandum between Russia and Venezuela's Energy Ministries to create a joint oil consortium. It was Russian Deputy Prime Minister Igor Sechin who first made it the point during his recent visit to Caracas. Russian Energy Minister Sergey Shmatko said that Venezuela's PDVSA will join the consortium (the company will have the controlling interest) and five Russian companies: Gazprom, Rosneft, LUKoil, TNK-BP and Surgutneftegaz. The Russian party will be headed by Gazprom. The monopoly’s representative explained to Kommersant that the gas giant won’t invest the assets it has in the consortium, and it will in no way be restricted by the consortium being able to pursue its own policy in Latin America. Gazprom, LUKoil, TNK-BP have already penetrated Venezuela's market – they have been assessing oil deposits in the Orinoco basin.
Representatives of the Russian Energy Ministry told Kommersant that the project of the consortium is at the negotiating stage, and it is too early to speculate about concrete forms of participation. But, according to Mr Shmatko, Russia “has managed to negotiate with the partners considering the outlook for some certain oil-bearing provinces and fields, which could be engaged in the consortium’s activity”. The Minister meant the Carabobo field in the first place. By the way, Russia is not the first country Venezuela promises a stake in Carabobo. Brazil’s Petrobras has been developing the oil field already, and in April a 40% stake in one of the four blocks was offered India’s ONGC.
Mr Shmatko said Russia would invest dozens billion dollars in the consortium. He also stated that the consortium will be able to work in other Latin American countries, namely, Cuba and Bolivia. The Minister promised that final agreements will be ready by April. However, interlocutors of Kommersant do not share Mr Shmatko’s optimism. “This concept hasn’t been thrashed out with the business. The companies to work together in the consortium are quite different, it may take them years to coordinate all issues,” a source of Kommersant with the Russian fuel and energy sector.
Yesterday the leaders agreed to set up a Russia-Venezuelan bank. It was Vladimir Putin who advanced this idea back 2006: he suggested that they should found a joint bank with Hugo Chávez to develop SMBs’ projects, as is between Russia and Kazakhstan. The parties were to invest $500 million each. However, according to First Vice President of the Russia-Venezuelan Business Council Vladimir Semago, the overall capital will hardly exceed $20 million. “The bank will be most certainly used by Rosoboronexport in the first place. As to Russian companies, Gazprombank and the VTB Bank will participate in the project, and to those of Venezuela - Banco de Venezuela, whose nationalizing Hugo Chávez announced early August,” Mr Semago told Kommersant.
Also, Moscow endorsed allocation of a $1 billion credit to Venezuela for purchasing Russian weaponry. According to the information of Kommersant, the negotiations about the majority of the contracts are very hard to conduct. Yesterday only Ilyushin Finance Co reported reaching an agreement with Caracas to supply Russian civil planes to Venezuela.
Russia’s risks are very high. The thing is, Venezuela will hold all its governors’ elections in November, which can lever opposition into power. As a result, the projects where Russia’s companies participate may be denied political support in the regions. “The projects have political grounds mainly – there are few economic benefits Russia can have. So far Hugo Chávez is getting true profit from the agreements. And Russia lacks a clear-cut economic strategy,” Vladimir Semago confessed. Nevertheless, Moscow seems to bring the relations with Caracas to a new level, rather than simply develop them in due course. According to the information of Kommersant, Dmitry Medvedev sets off for Caracas in November. More to the point, Venezuelan Days in Russia have been scheduled for October 22-24, with Vladimir Putin likely to visit it too.
Mikhail Zygar, Alexander Gabuev, Natalya Skorlygina; Suzanna Farizova, OrenburgK
All the Article in Russian as of Sep. 27, 2008
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