Iran, Venezuela boost ties with petrochemical plant

ASSALOUYEH, Iran, July 2 (Reuters) The presidents of Iran and Venezuela launched construction of a joint petrochemical plant today, underlining closer ties between the two oil-rich nations united in opposition to the United States.

Venezuela's Hugo Chavez and Iran's Mahmoud Ahmadinejad, who both often rail against Washington, took part in the ceremony to start building a methanol facility with an annual capacity of 1.65 million tonnes on the Islamic Republic's Gulf coast.

''Iran and Venezuela -- the axis of unity,'' read one of many official posters at the site near the port town of Assalouyeh, showing the two leaders hugging each other and shaking hands.

Iran, embroiled in an escalating nuclear standoff with the United States, was branded part of an ''axis of evil'' by U S President George W Bush after he took office in 2001.

Ahmadinejad and Chavez officially marked the opening event by instructing, via walkie-talkies, the drivers of two mechanical diggers to start working, amid tight security.

The Iranian president -- who came to power two years ago pledging to revive the values of the 1979 Islamic revolution -- hailed it as a step towards strengthening ''the brotherhood relations'' of the two ''revolutionary'' nations.

Chavez, who last week pushed two US oil giants out of his country as part of his self-styled socialist revolution, said: ''This is the unity of the Persian Gulf and the Caribbean Sea.'' Iranian officials said a second methanol plant would be set up in Venezuela. Each would cost about 650 million dollars to 700 million dollars and take four years to complete. Methanol is an alcohol which can be used as a solvent or an element in fuel.

That would help Iran to access the Latin American market, while Venezuela would get closer to fast-growing India as well as Pakistan. Both Iran and Venezuela are OPEC members.

''ANTI-IMPERIALISM WAVE'' Chavez, who wants to forge an alliance of leftist states to counter U S policies, arrived in Tehran on Saturday after visiting Russia and Belarus.

Yesterday, he told Ahmadinejad their countries should cooperate to defeat imperialism, Iranian media said. The Iranian leader took a similar line, telling his guest that ''victory (can) be achieved with resistance and standing firm.'' Iran's hardline Kayhan daily said the two countries were riding on a ''global anti-imperialism wave.'' But both also face economic challenges.

Iran sits atop the world's second-largest oil and gas reserves, but US-led efforts to isolate it over its nuclear ambitions are hurting investment in the sector, analysts say.

The Islamic state rejects accusations it is seeking to build atom bombs, saying it only aims to generate electricity, but major powers have begun talks on a third set of United Nations sanctions over its refusal to halt sensitive nuclear work.

Chavez, a staunch opponent of Bush, last week forced US oil majors from Venezuela, seizing oilfields from Exxon Mobil and ConocoPhillips.

But economists caution his social spending, mainly paid for by state oil company PDVSA, could run into trouble as Venezuela battles to maintain oil output after the exit of the majors. The opposition complain his anti-Americanism scares off investors.

REUTERS RN HT1747