Venezuela and Russia have boosted bilateral relations during a visit to the South American country by Russian prime minister Vladimir Putin, with the signing of 31 new co-operation accords in matters of energy, defence, trade, infrastructure, education, and culture, among others. Russia and Venezuela would become more united every day, Venezuelan president Hugo Chávez said following the meeting on Friday (2 April), while Putin hailed the accords as steps towards a "more democratic, balanced, and multipolar" world. The most import accord was in the energy area, where Putin's visit effectively cemented a deal under which a Russian consortium will join the Venezuelan state oil company PDVSA in developing the Junín 6 Block in the Orinoco heavy oil belt. Under the terms of the agreement, a Russian consortium made up of LUKoil, Rosneft, Gazprom, TNK-BP, and Surgutneftegaz will take a 40% stake in a mixed company, while Venezuela's state-run oil company PDVSA will control the remaining 60%. On Friday, Russian companies handed over an advance US$600 million of the US$1-billion signature bonus. The formal institution of the Petromiranda joint venture (JV) could be completed later this week, once President Chávez signs a presidential decree to transfer the right to conduct primary activities to the mixed company.

Venezuelan officials hope that production from Junín 6, which has reserves estimated (optimistically) at 53 billion barrels, will reach 50,000 barrels per day (b/d) later this year. However, Orinoco crude is extra heavy and must be processed before it can be refined. The new Venezuelan–Russian JV is also expected to build an upgrader facility, with output capacity of as much as 450,000 b/d. The commitment of both sides to further expand energy ties was also evident in a letter of agreement signed by Venezuelan's oil and energy minister Rafael Ramírez and the Russian consortium, paving the way for possible Russian involvement in the Ayacucho 2, Ayacucho 3, and Junín 3 blocks, which are also in the Orinoco belt. There was also more talk of Russia supporting Venezuelan ambitions to build a nuclear power plant for a civilian energy programme, a matter that has already been the object of a 2008 co-operation agreement.

Growing Relations

Ties between Russia and Venezuela have been growing over recent years on the back of shared geopolitical and economic interests, converting Russia into an important player in the Venezuelan energy sector and making Venezuela one the largest clients of the Russian military industry. Since 2005, Venezuela has purchased Russian military equipment to the tune of US$4.4 billion, and following President Chávez's visit to Russia last September, the South American country was granted another US$2.2-billion credit line for military hardware and equipment . Within the region, Russian involvement is strongest in Venezuela, but by no means limited to it. On Friday, Chávez and Putin were joined in the Venezuelan capital, Caracas, by Bolivian president Evo Morales, who asked the Russian leader to "relaunch" bilateral relations. In an effort to bolster bilateral ties, a Bolivian delegation will travel to Russia later this month for negotiations on possible Russian investments in its energy sector. Bolivia is also interested in a US$100-million loan to modernise armed forces and to buy a new presidential jet, say press reports. Putin's visit to Venezuela also comes on the back of last month's trip to Russia by Guatemalan president Álvaro Colom .

Outlook and Implications

Prime Minister Putin's visit to Venezuela is a shot in the arm for the increasingly embattled President Chávez, raising the latter's international profile at a time when he is under heavy fire for alleged links between illegal armed groups and Venezuelan government officials, as well as for repeated crackdowns on critical media outlets .The symbolic importance of the visit is underscored by the fact that Putin still went ahead with his planned trip to Venezuela despite the fact that the Russian capital, Moscow, had been hit by a major terrorist attack only days before. On the economic level, the addition of the 450,000 b/d of heavy Orinoco crude from the Junín 6 field would provide a major boost to Venezuela's ailing oil production.

More broadly, the visit is in line with the wider Russian policy aim to increase its presence in South America, a region of traditional U.S. influence. The growing Russian interest in the region has allowed some Latin American countries to diversify economic and political linkages, while also paving the way for much-needed foreign investment in the energy sector, a development that has not failed to raise eyebrows in the U.S. government. Nevertheless, although there are signs that Russian involvement in the region could grow beyond the military and energy sectors to include mining and other extractive industries, the depths of co-operation with Russia have so far failed to live up to the dramatic, geopolitical rhetoric that often accompanies state visits.