DOW JONES NEWSWIRES

CARACAS (Dow Jones)--Venezuelan President Hugo Chavez gave a vague account Wednesday of the country's military chasing off an unidentified foreign submarine allegedly caught trespassing in the South American nation's territorial waters.

Chavez said the encounter with the mysterious vessel occurred Tuesday and "it took flight, it was chased, but escaped because it was much faster." Chavez provided the information to ward off rumors, he said during a broadcast phone call to a Venezuelan state television program.

"Luckily our sailors and our people did not fall for provocation," he said.

The Venezuelan leader said he believed the encroaching watercraft was a nuclear submarine. Chavez said there was not enough information to definitively identify the vessel but an investigation had been opened. He cryptically added there were suspicions about who was behind the intrusion but he didn't offer further details.

"We can't accuse anybody. We suspect. We suspect," he said before adding that "empires," a term he often uses to describe the U.S., were once known to spy on the Caribbean region.

In recent days, the former army officer has been touting the beefed up hardware of Venezuela's armed forces and has stressed the need for a strong military to defend the oil-rich nation from the possibility of a foreign invasion.

Chavez has accused the U.S. and its allies of targeting OPEC countries like Iraq and Libya in order to control the flow of oil and has warned of alleged plots against Venezuela.

Venezuela's neighbors and the U.S. have looked on with some wariness as the mercurial Chavez has used the country's oil riches to fund a rapid military build up, purchasing fighter jets, tanks and air defense systems from Russia and China. Chavez maintains he is only updating the aging equipment of Venezuela's military and has forged defense ties with Moscow and Beijing after a U.S. arms embargo against Venezuela was imposed in 2006.