Chavez holds key to cheaper fuel

Food shortages, rampant inflation (despite booming oil prices and economic growth of 10 percent) and blatant undermining of democratic institutions have plummeted Chavez's popularity to its lowest level since he was elected in 1998.

Even other leftists in Latin America have criticised his style of governance at home and his dabbling in politics across the region.

This has forced the beleaguered Venezuelan president to retreat from his radical standpoint and even "make up" with previous adversaries like Colombian president Alvaro Uribe and King Juan Carlos of Spain, who famously told Chavez to "shut up" when he was rambling during a summit of Iberian leaders last year.

While both Mbeki and Chavez have stressed the advancing of south-south co-operation in the context of the Africa-South America conference due in Caracas later this year as the primary reason behind the visit, an energy agreement between the two countries is likely to dominate discussions.

Talks between PetroSA and the state-owned oil corporation PDVSA in Venezuela have already begun, and the Minister of Minerals and Energy Buyelwa Sonjica visited Caracas last week. The deal is expected to provide PetroSA with immediate and direct crude oil from PDVSA at a preferential rate.

The deal also seeks to pursue commercial opportunities around gas-to-liquid technology - an area where PetroSA is a world leader with enormous capacity. If technical difficulties can be overcome, such as how to refine the heavy Venezuelan oil as opposed to the lighter oil PetroSA refineries are accustomed to, Venezuelan oil could potentially provide for South Africa's liquid fuel needs through the massive Coega project planned for post-2010.

Chavez has used Venezuelan oil to assist "friendly" countries before.

Through the Petro-Caribe agreement Venezuela provides signatory countries in the Caribbean and Central America with cheaper oil.

He has extended similar concessions to Argentina and now Paraguay. But the agreement with South Africa would be one of the first outside of the broader region and certainly the first in Africa.

The energy agreement between South Africa and Venezuela may give real substance to the south-south dialogue. But what would Chavez expect in return? Simply, Chavez is hoping to rekindle his depleted popularity and gain a better foothold in Africa. South Africa could do both through political support in multilateral forums and collaborative efforts on various projects across the continent.

Chavez clearly sees South Africa as an equal and complementary partner in Africa. Venezuela is the forth-largest economy in Latin America with a population nearing 30-million people.

It is a founding member of the Organisation of Petroleum Exporting Countries (Opec), has the largest oil reserves in Latin America and is still one of the top five exporters of oil to the US.

Commercial ties between South Africa and Venezuela are still relatively insignificant. South African companies have some investment interests in Venezuela's mining industry. But there is a clear political understanding and ideological affinity between Chavez's government and certain factions within the South African leadership. While this will probably kick-start the bilateral relationship between South Africa and Venezuela, the energy agreement should provide the fuel to keep the relationship going through mutual economic gain in the future.

Ultimately, the true benefit and longevity of bilateral relations between countries of this nature are measured by tangible exchanges, not just friendly gestures and emotive popularity.