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16 Oct, 2010 13:58

Energy the cornerstone of Russian ties with Venezuela

The ten deals signed up to by Russia and Venezuela, during the visit by President Hugo Chavez to Moscow, underline the key role of energy in the ties between the two nations.

Leaders gave the deals their blessing, in an industry where political will counts a lot. Gazprom will build a Liquified Natural Gas facility together with Petroleos de Venezuela, and Rosneft will buy the Venezuelan state energy company’s half stake in Germany's Ruhr Oel for $1.6 billion dollars.

Perhaps the most anticipated deal, energy ministers of the two nations, jointly expressed support for TNK-BP’s purchase of BP assets. Aleksander Nazarov, Senior Analyst at IFC Metropol said the news is of strategic significance for TNK-BP as it seeks to establish its own global presence.

“I would call this project as a first significant upstream project for TNK-BP abroad. And probably it will be the first success of TNK-BP upstream abroad.”

Russia will also build the South American county’s first nuclear plant. Russia has just completed Iran’s first civilian nuclear facility, and has already agreed to help build reactors in China and Turkey.

Both Russia and Venezuela suffer from too much reliance on energy, and share the desire to diversify, according to Russian President Dmitry Medvedev.

“Our trade turnover is not as big as we would like it to be. We have interesting investment plans and today we already develop a number of joint energy projects.”

But energy is what binds the countries and more announcements are expected from other Russian companies exploring the region.