Moscow (Platts)--26Sep2008

Russia's president Dmitry Medvedev and Venezuela's president Hugo Chavez
have met Friday in Russia's city of Orenburg in West Siberia to discuss
cooperation in the economy sector, mainly in the energy sphere.

During the meeting a number of memorandums on cooperation in energy and
military-technical spheres were signed, Russia's Vesti channel said.

Apart from an intergovernmental agreement signed by Russia's energy
minister Sergei Shmatko and his Venezuela's counterpart Rafael Ramirez,
Gazprom and PDVSA have also signed an MOU to look into new opportunities for
cooperation between the two countries, Russia's ITAR-TASS said.

The two countries have also signed an MOU on cooperation in the
military-technical sphere, Vesti said. Ahead of Chavez' visit to Moscow, it
became known that the Kremlin had agreed to led $1 billion to Venezuela to buy
arms.

"The dynamic of our relationship has indicated how strong [our
fundamental] ties are," Medvedev told Chavez in televised comments.

In turn, Chavez reiterated his support of Russia's actions in its
conflict with Georgia and thanked Russia for the proposal to set up a
consortium with Venezuela's state-owned PDVSA and Russia's companies, as
Russia's RIA Novosti reported.

"There are a number of serious issues [to discuss]: establishing of joint
Russian-Venezuelan bank and the proposal which you together with [Russia's
prime minister Vladimir] Putin have sent to us to set up an oil and gas
consortium between PDVSA and Gazprom," Chavez was quoted as saying in Orenburg
earlier in the day. The consortium will probably include Russia's five biggest
oil producers--Rosneft, Lukoil, Gazprom Neft, Surgutneftegaz and TNK-BP.

On Thursday, Putin told Chavez that there were "new opportunities for the
cooperation in economics sphere--in energy, high technologies, machine
building and petrochemical--between two companies."

Russia is also ready to consider opportunities to cooperate in peace
nuclear sector, Putin said at the meeting in his residence outside Moscow.
Putin also praised the development of the cooperation between PDVSA and
Russia's energy companies.

"I'm pleased that the launch of Gazprom's first drilling rig in the Gulf
of Venezuela is scheduled for late October," Putin told Chavez, according to a
statement posted at Russia's government web site.

"I think that the cooperation between Russian companies and PDVSA has
good prospects not only in bilateral terms but also in third countries," Putin
said.

Chavez arrived to Moscow Thursday from Beijing as part of an ongoing trip
that will also take him to Belarus, France and Portugal before returning to
Venezuela.

During Chavez' previous visit to Moscow in July, Russian oil producers
TNK-BP, Lukoil and Gazprom signed a number of agreements with PDVSA to
appraise and develop projects in Venezuela. Last Friday, Gazprom, together
with Italy's Eni, also signed a memorandum of understanding to develop
offshore gas for Venezuela's Delta Caribe West LNG Project.

After Russia's deputy prime minister Igor Sechin's visit to Venezuela
last week, Chavez said that Venezuela and Russia would also form a joint
venture to manufacture oil field equipment in Venezuela.
--Nadia Rodova, nadia_rodova@platts.com