VTB Stakes on Oil Dollars of Venezuela
Vneshtorgbank (VTB) could become a backbone for Russia’s business in Venezuela, signal the minutes of recent meeting of Russia’s-Venezuelan intergovernmental commission. VTB’s biggest client on that market is Russia’s state exporter of weapons, Rosoboronexport, which contracts in Venezuela are estimated at $3 billion. But VTB will probably handle contracts of many billion dollars once Gazprom and LUKOIL launch business there.
According to the minutes of Russia’s-Venezuelan intergovernmental commission, Russia’s VTB and Venezuelan Banco de Comercio Exterior and Banco de Desarrollo Economico y Social will fund business and investment projects of both countries.
VTB will become a backbone bank for Russia’s business in Venezuela and is currently deciding whether to set up a subsidiary there, said a source with the commission. In VTB, however, they didn’t confirm this Latin America’s intention of the bank. “So far, it is not the question of creating a VTB subsidiary in Venezuela,” said Vasily Titov, senior vice president of VTB.
The monopoly on handling accounts of Russian companies in Venezuela is bound to yield a lot to VTB. One of the biggest clients of VTB, Rosoboronexport, has entered into a raft of large-scale contracts with Venezuela, including deliveries of 24 Su-30 fighters worth $1.5 billion, shipping around 100,000 Kalashnikov submachine guns there and constructing a plant for their production. On aggregate, the budget of Russia’s military deals with Venezuela is estimated at around $3 billion.
Moreover, a dozen of Russia’s companies, including Gazprom and LUKOIL, are entering the market of Venezuela. Gazprom’s subsidiary, Zarubezhneftegaz, won a tender last year to develop two areas of Rafael Urdaneta gas fields. Another subsidiary, VNIIGAZ, sealed a contract with Petroleos de Venezuela (PdVSA) to elaborate a general pattern for the gas industry’s advance in Venezuela. LUKOIL is nearing the purchase of some assets of the U.S. CITGO Petroleum, which is PdVSA’s subsidiary. And last but not least, Tube Metallurgical Company (TMC) intends to participate in elaborating the project for constructing a tube plant in Venezuela.
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All the Article in Russian as of Oct. 23, 2006
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