Lukoil officials said Tuesday "the contract has been finalized and is waiting to be signed," Russia's Itar-Tass news agency reported.

However, the agreement won't be signed by Lukoil, Russia's second-largest petroleum company, until the results of the exploration of the Junin 3 block are learned, the company said in a statement.

Orinoco reserves are estimated at 230 billion barrels or more.

Venezuelan Vice President Jorge Rodriguez is in Moscow to meet with Lukoil officials and discuss the state of the bilateral petroleum agreement for Junin 3 and other projects, which according to PDVSA have been two years in the making.

Under the deal, Lukoil will reportedly accept the terms of Venezuela's reconfigured foreign petroleum investment policy and take a 40 percent stake in the Junin 3 block with PDVSA assuming the rest.

The Lukoil-PDVSA and other pacts with non-traditional trading partners such as China appear to be part of Venezuelan President Hugo Chavez's long-term agenda for reducing his country's dependence on the United States and other Western petroleum countries.

Earlier this year Venezuela and Iran inked a $4 billion deal to develop a block of Orinoco, with production slated to begin in two years. The Ayacucho 7 block is believed to hold more than 30 billion barrels of oil alone, making it one of the largest in the country.

A recent statement by PDVSA said Iran will build four oil rigs offshore Venezuela by the end of the year.

Venezuela's increased dealings with Russia and Iran, as well as China, play directly into President Hugo Chavez's plans to shrink the portfolio of Western firms in the country.

Chavez has long asserted the Bush administration was keen on seeing him removed from power because it sees his populist ideals as a threat to the national and regional stability.

Chavez administration officials have repeatedly asserted that if provoked by the United States, PDVSA would have no problem halting oil shipments to the United States, Venezuela's largest customer.

Venezuela in May assumed majority control of its oil and gas operations, forcing foreign firms to accept the new conditions or face fines and expulsion from the country.

Though most companies complied, both ConocoPhillips and Exxon Mobil Corp. pulled out of the country after a protracted struggle with PDVSA.

Their departure has left a production vacuum that PDVSA has yet to fill. Venezuela's oil output is believed to have slipped by more than 250,000 bpd from a year ago, according to the Paris-based International Energy Agency. Production has reportedly decreased from 2.6 million bpd to 2.37 million bpd.

Hoping to counter the shortfall, PDVSA recently announced it was investing $3.5 billion in new oil rigs, a much-needed injection of cash into improvements for a sector that some experts say has been abused by Chavez for his social programs.

(e-mail: [email protected])

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