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Brazil eyed as major Venezuelan oil importer

First orders for Venezuela to export crude oil to Brazil have already been made signifying a promising trade relationship between the newly joined Mercosur members

Venezuela is eyeing Brazil has a major oil importer, following this week’s pivotal agreement to join the Latin American trading bloc, Mercosur.

After a six-year delay, one of the world's largest oil producers, Venezuela on Tuesday became the fifth full member of the bloc. The country now joins Argentina, Brazil, Paraguay and Uruguay in the bid to promote free trade and the fluid movement of goods, people, and currency between the countries.

Venezuelan president, Hugo Chavez on Tuesday announced proposals to export crude to Brazil during a visit to the country to ratify his nation’s entry into the regional trade bloc. First orders for Venezuela to export crude oil to Brazil have already been made, he confirmed .

Net imports currently account for around 5 per cent of Brazilian energy demand, which is growing at a rate of 3.4 per cent annually, according to industry figures. Consumption of diesel, which accounts for much of the growth, grew by 9 per cent in 2011, while jet fuel use rose by 9.7 per cent between 2006 and 2010.

Brazil’s foreign ministry in a statement said Venezuela’s inclusion “altered the strategic positioning of the bloc”. Mercosur was "also positioning itself as a global energy power in renewable and non-renewable resources", it added.

"Brazil is still importing oil, and we are increasing production," Chavez said. "This year, Venezuela will go from 3 million to 3.5 million barrels a day of crude", Chavez told local media.

Brazilian oil giant, Petrobras in June warned the country could be importing as much as 1 million b/d of refined products by 2020 if it failed to urgently boost its domestic refining capacity.

In 2007 Brazil and Venezuela pledged closer trade and energy ties, including building a new oil refinery in Brazil. The USD 4.5bn refinery scheme, completed in 2010, is 40 per cent-owned by Venezuela's state oil firm PDVSA, while Brazil's national oil firm Petrobras holds the rest.