Venezuela’s Chavez offers to help Uruguay expand oil refinery under agreements with new leader

Uruguay’s new leader strengthens ties with Chavez

CARACAS, Venezuela — 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, popularly known as “Pepe,” signed accords pledging to deepen trade and energy ties between the two South American 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 honor — and gave him a replica of a sword used by South American independence hero Simon Bolivar — the namesake of Chavez’s socialist-inspired “Bolivarian Revolution.”

Chavez said 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.

Under the accords, Uruguay will export 1,000 vehicles to Venezuela and help the oil-dependent country develop agriculture projects. The two nations also plan to cooperate in building glass and cement factories, producing software and establishing construction companies.

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

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

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

While Mujica shares some of Chavez’s leftist views, he has vowed to take a more moderate approach to politics.

Prior to his election in November, Mujica denied he would radically reform Uruguay’s stable parliamentary democracy and push the country toward socialism — like Chavez. Mujica says he’s more inspired by the performance of Brazilian President Luiz Inacio Lula da Silva.