Nov. 8 (Bloomberg) — Venezuela and Russia agreed to form a $4 billion joint bank to pay for development projects, along with 14 other agreements between the oil-exporting countries.
Officials from OAO Gazprombank and state energy company Petroleos de Venezuela SA signed a memorandum of understanding between the two countries yesterday in Caracas, in a ceremony on state television attended by President Hugo Chavez and Russian Deputy Prime Minister Igor Sechin.
Venezuela, the biggest oil producer in South America, is seeking new funding sources as bonds and bank loans become more difficult to arrange amid a lack of buyers for emerging market debt. The country formed a $12 billion development fund largely with Chinese loans that are being repaid in oil.
Finance Minister Ali Rodriguez will go to Russia this week to discuss the bank, Chavez said.
It will primarily finance economic development in Venezuela, Elias Jaua, the South American country’s minister of land and agriculture, said yesterday in an interview.
Rodriguez will look into making it possible to engage in trade using bolivars and rubles rather than dollars or euros, Chavez said. “We are also studying using the ruble as the reference for the international reserves,” he said.
United Co. Rusal is continuing efforts to open an alumina mill in Venzuela, Chavez said. The country will find a way to provide the 4 gigawatts of electricity that the plant needs, Chavez said, possibly by building electric plants that burn coke, a carbon-rich byproduct of oil refining.
Rodolfo Sanz, Venezuela’s minister of basic industries and mining, said the Rusal mill would process 1.4 million tons a year, double Venezuela’s current output.
Corp. Venezolana de Guayana, Venezuela’s state commodities company, will form a venture with Russian partners to mill gold and copper out of ore and to explore new deposits, Chavez said.
Vladimir Agapov, whose Rusoro Mining Ltd. owns Venezuelan gold mines, said at the event he and CVG plans to build five kaolin processing plants to make the clay into one of Venezuela’s biggest exports. He didn’t comment on a Nov. 6 report that Sanz had said Rusoro would become a partner in the country’s biggest gold mine.