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Venezuela to lend Ecuador crude oil - Chavez

Posted on: Sunday, 21 August 2005, 15:49 CDT

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.

Source: REUTERS

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