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By Lyubov Pronina and Matthew Walter

Nov. 27 (Bloomberg) — Russian President Dmitry Medvedev and Venezuelan President Hugo Chavez agreed to form joint ventures to pump crude oil and to increase military and nuclear cooperation yesterday in the first visit by a Russian president to the South American country.

Medvedev and Chavez took a tour today of the Russian atomic- powered navy cruiser Peter the Great, which is visiting Venezuela along with three other Russian vessels. The ships will conduct exercises in the Caribbean Sea starting Dec. 1 with the Venezuelan navy.

“We’re developing full-fledged relations in the arms sphere,” Medvedev told reporters in Caracas late yesterday. “These ties aren’t directed against any other country. They are based on partnership and a pragmatic understanding of the situation in the world.”

Chavez, a long-time critic of the U.S., praised Russia’s “resurgence” and called for an end to U.S. global economic hegemony during a ceremony at the presidential palace in Caracas.

Venezuela, the fourth-biggest supplier of foreign crude oil to the U.S., increasingly relies on investment from countries like Russia, China and Iran to boost oil output.

“Russia is back on its feet and playing an important role,” Chavez said. “I’m committed to continue to work together like this.”

‘Poles of Strength’

Medvedev arrived in Venezuela after visiting Peru and Brazil as part of a Latin America tour. He flew to Cuba today, winding up a week-long visit to promote economic and political ties in the region.

“The world is becoming multipolar,” Mikhail Margelov, chairman of the Foreign Affairs Committee in Russia’s upper house of parliament, said yesterday at the event in Caracas. “Latin America is also one of the poles of strength.”

“Russia is back in Latin America, Russia is back in Africa, and Russia is back in Asia,” Margelov said. “We are ready to work in markets where we can be competitive.”

OAO Gazprom and four Russian oil companies will create a joint venture with Petroleos de Venezuela SA to pump and refine oil from the country’s Orinoco Belt, Gazprom Deputy Chief Executive Officer Alexander Medvedev said yesterday in Caracas.

Arms Sales

The companies will jointly produce oil from the Carabobo area, site of the biggest reserves in the Orinoco. The venture will also build a facility to refine tar-like crude into lighter, more valuable oil for export, Medvedev said.

Other companies involved in the venture include OAO Rosneft, TNK-BP, OAO Lukoil and OAO Surgutneftegaz.

The two countries will jointly produce 1 million barrels a day in Venezuela in the medium term, Venezuelan Energy and Oil Minister Rafael Ramirez said. The countries agreed to keep working together to develop a “peaceful” nuclear energy program.

Chavez has been cozying up to Russia over the past few years, buying more than $4.4 billion in weapons and promising access to Venezuelan oil fields for Russian companies.

Venezuela’s Russian arms purchases include 100,000 Kalashnikov rifles, 50 military helicopters and 24 Su-30 jet fighters, according to a U.S. Defense Intelligence Agency report.

“This underscores that military cooperation is developing, and that’s good,” Medvedev said today during the navy cruiser tour. “We are ready to further develop strategic operations.”

Chavez visited Russia in September and secured a $1 billion credit line to buy more Russian weapons. Today Medvedev and Chavez presided over the signing of an agreement for Venezuela to buy two Il-96 long-haul aircraft from Ilyushin Financial Co., a Moscow-based airplane leasing company.

Trade Partners

Venezuela is Russia’s third-largest trading partner in Latin America. Trade more than doubled last year to $1.2 billion on Russian arms sales.

Beyond energy and arms, the countries have also agreed to expand industrial and financial agreements.

Russian Deputy Prime Minister Igor Sechin visited Caracas on Nov. 6, signing agreements to establish direct airline service between the two countries, build Russian cars in Venezuela, and form a $4 billion bi-national bank.

Moscow-based United Co. Rusal, the world’s biggest aluminum producer, has Russian government support in its attempt to build an aluminum mill in Venezuela. OAO AvtoVAZ, Russia’s biggest carmaker, is in talks with the Venezuelan government to start building an assembly plant in the country next year.

To contact the reporters on this story: Lyubov Pronina in Caracas via the Moscow newsroom at lpronina@bloomberg.net; Matthew Walter in Caracas at mwalter4@bloomberg.net.
Last Updated: November 27, 2008 14:15 EST