MercoPress. South Atlantic News Agency

Mujica consolidates close trade and energy links with Venezuela

The Uruguayan president and the Venezuelan leader at the Miraflores palace

Venezuelan President Hugo Chavez offered Wednesday to help Uruguay expand a refinery and supply it with crude oil. Chavez and visiting Uruguayan President Jose Mujica signed several accords pledging to deepen trade and energy ties between the two nations.

Venezuela's president expressed admiration for the 74-year-old Mujica, a former leftist guerrilla leader who took office last month. Chavez embraced Mujica when he arrived at the presidential palace, affectionately calling him “a mentor.”

Chavez presented Mujica with the Order of the Liberator, Venezuela's highest honour and gave him a replica of a sword used by South American independence hero Simon Bolivar, the namesake and inspiration of Chavez's socialist-inspired “Bolivarian Revolution”.

“Uruguay has oil” said Chavez, “Uruguay has all our reserves they need” and “hopefully they will drill with us in the Orinoco basin”. He added that Venezuela will renew a deal to sell Uruguay up to 40,000 barrels of oil a day under preferential terms.

“The entire consumption of Uruguay doesn't surpass 40,000 barrels a day,” Chavez said before he met with Mujica at the palace.

Chavez said he and Mujica also would discuss Venezuelan help in expanding Uruguay's La Teja refinery. He said it should be upgraded with equipment allowing it to refine heavy crude from Venezuela's eastern Orinoco River basin.

Since 2005, Venezuela has shipped 17,000 barrels a day of oil to Uruguay.

Under the 2005 agreement, Uruguay pays for 75% of the oil in cash. It can purchase the remaining 25% of the bill over a 15-year period at 2% interest. Since the shipments commenced five years ago, Uruguay has run up a 524 million US dollars debt, Uruguayan Economy Minister Fernando Lorenzo said.

The previous agreements were the product of Chavez's friendly relations with Mujica's predecessor, Tabare Vazquez.

Under the accords Uruguay also plans to export 1,000 vehicles to Venezuela and to continue providing agricultural technology and expertise.

“Uruguayan cows average 25 litres per day; our cows hardly make two to three litres, we’ve even forgotten how to milk in spite of the fertile lands we have. Uruguayans are giving as a big hand in re-introducing the camp work discipline and improving the quality and efficiency of our cattle”, said Chavez.

Uruguay apparently also was granted a logistics space (former Venezuelan Navy barracks) in Puerto Cabello from where it will operate and distribute imports, mostly food items such as milk, cheese, poultry, beef and cereals. Last year Uruguay exported 186 million USD mostly agricultural products to Venezuela and purchased 520 million USD of oil.

During the ceremony at the Miraflores presidential palace President Mujica praised his peer and said that he had never known a government as supportive as the administration headed by Hugo Chávez. Mujica also thanked the Venezuelan people for having received “thousands of Uruguayans”, when Uruguay was under a military regime.

However in spite of the fact Mujica shares some of Chavez's “Bolivarian dreams of Latinamerican unity”, he has shown a more moderate and pragmatic approach to politics and international relations.

In several interviews Mujica has expressed admiration for Brazil’s Lula da Silva and his orthodox policies and revealed he has warned Chavez that his regime is being undermined by the bureaucracy, “the worst of evils”.