US to monitor energy accords between Iran, Venezuela

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Oct. 22 -- The US Department of State said it will closely monitor recent energy agreements between Venezuela and Iran to ensure that they do not violate international sanctions against the Middle Eastern country.

“We will watch to see if any of these deals…constitute a violation of the Security Council resolutions and sanctions against Iran,” said State Department spokesman Philip Crowley.

The State Department’s announcement came after Venezuelan President Hugo Chavez, on a visit to Iran, signed a number of agreements focused on energy cooperation with his Iranian counterpart, Mahmoud Ahmadinejad.

Among the agreements signed were pacts for the formation of a joint oil shipping company and joint construction of petrochemical plants, as well as Venezuelan participation in the exploitation of Iran’s South Pars gas field.

Under the shipping agreement, PDV Marina, Petroleos de Venezuela SA’s shipping subsidiary, and Iran's IRISL Group, plan to create a maritime oil transport firm that will enable Caracas to sell more than 500,000 bbl of crude in Europe and Asia.

The two sides also reaffirmed an earlier agreement to build a refinery in Syria, Iran’s main ally in the region. An agreement to build the refinery was first signed in 2007 with Iran, Venezuela, and Malaysia as partners.

Earlier this year, the US introduced new sanctions against Iran that target the country’s gasoline imports. The European Union also passed sanctions that target the financing of Iranian refineries.

There is concern in Washington, however, that the new refinery in Syria could be used in an effort to bypass those sanctions.

Chavez shrugged off those concerns, saying that his country remains committed to helping fund the construction of the Syrian refinery, which should be finished in 2 years. Chavez did not say how much his cash-strapped country would actually contribute.

Venezuela also signed an agreement to supply Syria with as much as 1 million tons/year of diesel fuel for domestic use, Chavez said.

Underlying Chavez’s visit, however, were additional concerns in Washington and Europe about possible cooperation between Venezuela and Iran on nuclear issues—a point stressed by Crowley.

“Venezuela has a right to pursue civilian nuclear energy,” Crowley said, adding that, “it also has a responsibility to make sure that any nuclear program does not represent a proliferation risk.”

Crowley’s remarks echoed President Barack Obama’s earlier backing of Venezuela's efforts to develop nuclear power after Chavez signed an agreement that will see Russia build and operate Venezuela’s first nuclear power plant.

Russia’s President Dmitry Medvedev announced the move at the end of a 2-day visit to Moscow by Chavez, who says he wants nuclear power to diversify energy supply—a point stressed by other Venezuelan officials.

"We are going to start designing the project," said Venezuela’s Electricity Minister Ali Rodriguez, who is charged with expanding the country’s inadequate power capacity.

"It's long term because the idea is to reach 4,000 Mw of nuclear capacity within about 10 years," said Rodriquez. “Our plan is not just for electricity, but also to create health products and use it for other peaceful means."

While Chavez insists that his country has only peaceful intentions for nuclear power, he backs Iran's right to a nuclear program, which Western powers suspect may be secretly intended for arms. The evident concern is that Venezuela might contribute to Iran’s nuclear capability.

Contact Eric Watkins at hippalus@yahoo.com.

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