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Analysis: Venezuela, Iran bolster ties

disclaimer: image is for illustration purposes only
by Carmen Gentile
Miami, April 23, 2008
Energy officials from Iran said they were ready to make good on promises to bolster energy ties with Venezuela by establishing a joint Tehran-Caracas oil company, a concept considered far-fetched by some considering the rash of projects proposed by the two nations that have yet to come to fruition.

Mohammad Hasan Mirzai, the engineering management deputy for Iran's Petropars Co., said earlier this week, "Cooperation żż between (Iran's) Petropars and Venezuela's Oil Company (PDVSA) has been established to boost bilateral ties."

Mirzai said the deal would include "the development of some blocks in the Ayacucho oil field," a heavy oil site, adding Iranian experts already "are working in Venezuela preparing the preface for future agreements."

While the proposed deal appears to be a bolstering of Venezuelan and Iranian ties -- an alliance that over the last several years has raised concern in Washington -- the possibility of real outcome is slim, said Jorge Pinon, an energy fellow with the University of Miami's Center for Hemispheric Policy.

"It is highly unlikely that this deal will materialize," Pinon told United Press International. "Most of these state-to-state agreements are discounted by the (petroleum) industry because they recognize they are only (part of) a political agenda and have no economic justification."

Pinon also noted that Iran lacks the technological expertise to refine Venezuela's heavy crude, while also needing significant investment in its own energy sector.

"Extra-heavy oil needs specialized expertise. żż Iran doesn't have that know-how," he said.

Despite Iran's technological shortcomings in the oil and gas sectors, Venezuelan President Hugo Chavez has sought closer ties with Tehran in recent years. Over the last two years Chavez and Iranian President Mahmoud Ahmadinejad have met many times and expressed their mutual desire to reduce their dependence on the United States as a petroleum customer.

Both nations have poor ties with Washington, though by varying degrees.

While the Bush administration considers Iran a state sponsor of terrorism and a member of the "axis of evil," relations between Washington and Caracas have deteriorated in recent years. Chavez has accused the White House of sponsoring opposition groups trying to topple him, an accusation the White House denies.

In an effort to wean themselves and other nations off U.S. dollars and its aid, Venezuela and Iran announced at the beginning of 2007 they would create a multibillion-dollar fund to help finance projects in countries that traditionally rely mainly on U.S. funding.

Ahmadinejad and Chavez -- speaking during the Iranian leader's visit to Venezuela -- said they would together help smaller, poorer nations escape the "imperialist yoke" of the United States.

That fund, however, has yet to materialize.

In 2006 Iran announced it would build an oil refinery in Faga, in Venezuela's oil-rich Orinoco province, and that the refinery would refine heavy oil into gasoline and other oil derivatives.

At the time, Energy Minister Rafael Ramirez said the agreement would benefit both countries, adding that after the refinery comes online Iran will import gasoline from Venezuela. So far, no such refinery has come online in Orinoco.

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IEF expresses 'concern' over high oil prices
Rome (AFP) April 22, 2008
Ministers from 74 countries attending the International Energy Forum here expressed "concern" Tuesday at high oil prices, which topped a record 119 dollars.

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