August 21, 2005

Venezuela to lend Ecuador crude oil – Chavez

HAVANA (Reuters) - Venezuela will lend Ecuador crude oil
cost-free to cover exports crippled by protests against
Ecuador's state-owned oil company, Venezuelan President Hugo
Chavez said on Sunday.

Chavez gave no details on the amount of crude involved in
announcing the deal on his weekly television show, which was
aired live from the town of Sandino with Cuban President Fidel
Castro standing by his side.

Venezuelan Foreign Minister Ali Rodriguez said there would
be a meeting in Caracas on Monday to study the request and the
availability of Venezuelan crude.

Disturbances and attacks on pipelines in oil fields in the
Amazon provinces of Sucumbios and Orellana forced Ecuador to
declare a state of emergency last week and state-owned
Petroecuador had to shut down production.

Ecuador, with only an eight-day supply of reserves left,
asked Chavez on Saturday for a loan of Venezuelan oil to meet
its export commitments. Chavez called Ecuador's President
Alfredo Palacio promising the loan, a presidential spokesman in
Quito said.

"We decided yesterday. We are going to help Ecuador,"
Chavez said in his broadcast. "Venezuela will cover the
commitments that the Ecuadorean government has not been able to
fulfill these days. They will not have to pay a cent."

Chavez said he hoped Ecuador would join the Organization of
Oil Exporting Countries (OPEC).

Protesters in Ecuador started dynamiting pipelines and
vandalizing pumping machinery on Monday to demand more
investment and employment in the oil industry and the
renegotiation of contracts with multinational oil companies
operating in Ecuador.

The stoppage helped push U.S. crude oil futures by $2 to
more than $65 a barrel on Friday.

Protest leaders agreed on Sunday to halt their attacks and
negotiate with the government after their release from jail.

Venezuela is the world's fifth oil exporter and a major
supplier to the United States. Ecuador is the second-largest
South American supplier to the U.S. market after Venezuela.

Chavez, a left-wing populist at odds with Washington, has
tried to reduce Venezuela's economic reliance on the United
States by signing energy deals with South American countries,
as well as China, Russia and India.

He also has sought to extend Venezuela's regional influence
by offering oil on generous terms to Caribbean nations.

Closely allied with Communist-run Cuba, Chavez and Castro
have proposed creating a Latin American alternative to the
U.S.-backed Free Trade Area of the Americas.

Chavez was in Cuba to attend the graduation of Venezuelan
medical students. He also visited Sandino in westernmost Cuba,
where Venezuelan troops helped build 150 pre-fabricated houses
after Hurricane Ivan blew through last September.