Aluminum, gas projects are among planned Russian-Venezuela joint ventures

Strategic ties between Russia and Venezuelan are being firmed up with agreements for aluminum and gas production, along with other ventures aimed at broadening economic ties between the two nations.

Russia and Venezuela have signed 15 co-operative agreements in the financial, industrial, mining, aerospace, energy and communications, which include a joint venture with Russian aluminum giant RusAl building a production facility in Venezuela.

Novosti, the Russian News & Information Agency, reported that RusAl and its Venezuelan partner will split ownership of the joint venture. RusAl's Director for International and Special Projects, Alexander Livshits, said the joint venture's biggest problem was not financing, but power, which would be solved by building a new power plant.

Venezuelan President Hugo Chavez said the two countries are establishing a strategic alliance. "We have freed ourselves from Yankee imperialism," he declared. Chavez and Russian Deputy Prime Minister Igor Sechin have set up a $4 billion joint development bank to finance gas production, aluminum production and other projects. The men inaugurated the first Venezuelan-Russian offshore natural gas project, which will be partially financed by Gazprombank, the banking division of Russia's Gazprom.

Although Venezuela has South America's largest natural gas reserves, they are largely undeveloped because the country focused on oil for energy production. Gazprom has a contract to develop two Venezuelan natural gas properties and is expected to start producing gas by 2013. The two countries have also reached agreement on developing nuclear power generation for Venezuelan.

The head of international relations at Russia's Finance Ministry, Konstantin Vyshkovsky, said the bank would finance projects in Russia and Venezuela, and could be involved in payments for oil deliveries. He told Novosti that the global financial turmoil means that it was a good time to create such a bank.

Russian President Dmitry Medvedev is expected to visit Latin America later this month and is believed to be making Venezuela one of his stops. His visit will coincide with the arrival of a fleet of Russian warships that includes a nuclear-powered cruiser for maneuvers in the Caribbean. It will be the first time Russian warships have sailed into the region since the end of the Cold War. Venezuela and Russia are also due to finalize new arms purchases including tanks and planes.

Meanwhile, news reports have suggested that Venezuela will seize two prime gold projects from North American junior mining companies and turn them into a joint venture with Rusoro Mining, which has financial ties to Russia.