Analysis: Iran, Venezuela tied over energy

WASHINGTON, July 10 (UPI) -- It is not only a mutual interest in insulting the United States that ties Venezuela and Iran together, it is a need for cooperation between their petroleum industries.

In a world in which Iran cannot do business with the United States and Venezuela does not want to, the two countries are increasingly looking to each other for energy cooperation.

A visit to Tehran by Venezuelan President Hugo Chavez in early July further cemented growing ties between the two petroleum economies. Chavez came away from his meetings with Iranian officials with deals for joint industrial centers, a joint-run petrochemical plant and a joint-run international oil company.

And Iran's brand-new state-run PressTV reported Monday that Venezuela will sell Iranian cars built in a joint-run factory in Venezuela. Venezuela will also ship much-needed gasoline to Iran.

While Iran holds the world's second-largest oil reserves and is the world's fourth-largest exporter, it still struggles to provide enough energy for its own economy.

The country's aging oil refineries are in desperate need of renovation and modernization, and the Iranian government is stuck providing subsidized gasoline at about 40 cents a gallon. Gasoline shortages have plagued Iranian drivers, and with no end in sight, Tehran was forced to impose enormously unpopular gas rationing at the end of June.

In embracing Venezuela, Iran is happy to get all the international cooperation it can to support its floundering oil and natural gas industries.

Concerns over Iran's nuclear ambitions have led many U.S. and European companies to abandon business dealings with Tehran, under pressure from their governments, and China and Russia have slowed investment in the Iranian petroleum industry.

Iran has responded by courting China and Russia more strongly for investment, as well as turning to India and other countries in Asia for refinery use.

While the International Atomic Energy Agency said Monday it appears that Iran is slowing its efforts to enrich uranium, Iranian President Mahmoud Ahmadinejad has been clear in the past that Iran will continue to pursue the complete nuclear fuel cycle, which includes enriching uranium.

The United States and Europe have been critical of these efforts because mastery of the fuel cycle is a crucial step in building nuclear weapons.

If the phrase "the enemy of my enemy is my friend" is true, Iran has found a soul mate in Venezuela. Ties between Washington and Caracas have been fraying for several years, since Chavez came to power in elections the United States called undemocratic. Chavez accuses the White House of being behind the failed 2002 coup. Washington has also been nettled by Chavez's constant and colorful insults of U.S. President George W. Bush and U.S. foreign policy.

An uncertain energy future is also bringing Iran closer to Venezuela. Although it has around 80 billion barrels of oil in proven reserves, making it the world's sixth largest, the Venezuelan government is moving to nationalize the industry, and the country is highly dependent on oil exports, which accounts for about a third of the gross domestic product.

In late June a bid to bring much of the country's oil reserves under government control caused U.S. oil giants ConocoPhillips and Exxon Mobil to abandon projects in Venezuela and turn over the operations to the Venezuelan national oil company, PDVSA.

Despite the friction between the United States and Venezuela, and growing ties between Tehran and Caracas, U.S. ports remain the most common destination for Venezuelan oil. Exports in the first half of 2006 to the United States averaged 1.45 million barrels a day, according to the Energy Information Administration, the data arm of the U.S. Department of Energy.

Venezuela has not only reached out to Iran. Caracas is also beefing up its relations with competitors with the United States on the global stage, Russia and China.

After the United States refused to supply replacement parts for Venezuelan fighter jets, Chavez turned to Russian-built weapons, from helicopters to fighter jets to small arms. And during a trip to Moscow in late June, Chavez said he was considering buying several diesel-powered military submarines.

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(e-mail: energy@upi.com)