Venezuela, Cuba forge anti-US alliance

HAVANA, Friday (Reuters) - Oil exporter Venezuela drew closer to Cuba by establishing subsidiaries of its state oil company Petroleos de Venezuela (PDVSA) and a government bank on the Communist-run island.

Presidents Hugo Chavez and Fidel Castro, who are seeking to build an alternative to the U.S.-backed Free Trade Area of the Americas — from which Cuba is excluded — attended the launchings in an upbeat mood.

“We are very pleased. This is a historic day,” said Castro, 78, dressed in his customary military uniform.

Said Chavez: “We have been building this brick by brick, like a house.”

The left-wing leaders tasted food at a fair where Venezuelan businesses sold $412 million in products to Cuba with the help of Venezuelan export credits. The goods will enter Cuba tariff-free.

Castro declared the FTAA dead in a three-hour speech in which he said the U.S. proposal for a single free-trade bloc of the Americas was an “anexionist plan” aimed at plundering Latin American resources.

“What’s left of the FTAA is just pieces, bilateral agreements,” Castro said of the hemispheric free-trade plan, which has met with growing resistance in Latin American societies disillusioned with the promises of free-market capitalism.

In the last five years, Venezuela has become a vital economic lifeline for Cuba’s cash-starved government, partly filling the void left by the Soviet Union’s collapse with vital supplies of oil on very favorable terms.

Cuba is paying for the estimated $1 billion a year oil bill with medical and educational services. Officials said 30,000 Cuban doctors and medical personnel are working in Venezuela.

The partnership is viewed with suspicion in Washington where Bush administration officials see a conspiracy against U.S. interests in Latin America. Venezuela, the world’s fifth largest oil exporter, is a major source of energy for the United States.

PDVSA will make Havana the headquarters for its Caribbean oil refining and distribution plans. It signed an agreement with the Cuban oil company Cupet to build a lubricants plant in Cuba.

The Venezuelan company is also looking at building a super-tanker shipping terminal and a storage facility with a 600,000 barrels a day capacity at Matanzas, east of Havana, and the completion of a Soviet-built oil refinery in Cienfuegos.

PDVSA will consider off-shore exploration in Cuba’s Gulf of Mexico waters, where Spain’s Repsol YPF last year discovered a noncommercial deposit of good quality oil.

The two countries further agreed to undertake joint nickel and cobalt mining projects, improve communications and step up air and shipping links.

Venezuela increased oil shipments to Cuba to 80,000-90,000 bpd, Venezuelan Oil Minister Rafael Ramirez said on Wednesday.

Since 2000, Venezuela has officially supplied Cuba with 53,000 bpd of crude and refined products, but exports have risen since Chavez’s consolidation of power.