Hugo Chávez says he wants to cut oil reliance, while Moscow asserts Venezuela's right to 'full range of energy choices'

Russia has agreed to help Venezuela build its first nuclear power station in a move likely to raise concerns in Washington about increasingly close cooperation between Moscow and Caracas.

President Dmitry Medvedev announced the move at the end of a two-day visit to Moscow by Venezuela's president, Hugo Chávez. The Venezuelan economy is overwhelmingly reliant on oil and Chávez has said he wants nuclear power to diversify energy supply.

Medvedev has implicitly acknowledged the deal is likely to be unpopular with the US but defended Venezuela's right to seek access to peaceful nuclear technology. The station is likely to be built over the next 10-15 years. Its cost has not yet been revealed.

"An agreement has just been signed on co-operation in the atomic sphere. I don't know who will shudder at this," Medvedev told a press conference after his talks with Chávez. "The president [of Venezuela] said there will be countries in which this will provoke different emotions. But I want to say specially that our intentions are absolutely pure and open." Russia wanted Venezuela to have a "full range of energy choices".

Chávez's visit is his ninth to Moscow and the first stop on a 12-day European tour that includes visits to Belarus and, for the first time, Ukraine – now once again within Moscow's sphere of influence. On previous occasions, Chávez has bought billions of dollars worth of military hardware from Russia including submarines, helicopters and attack aircraft. Both leaders have reaffirmed their plans to continue military-technical co-operation.

Viktor Semyonov, an economist at Moscow's Institute of Latin American Studies, said it was logical for Venezuela to seek civilian nuclear technology since its economy was even more dependent on oil than Russia's. Russia was already building a nuclear power station in Iran and holding talks with other Latin American countries, including Brazil and Argentina.

"We are a country that exports nuclear technology around the world. Venezuela's economy is 94 or even 95% made up of oil. Russia's is 65%, which is already a lot. They (the Venezuelans) want to widen their sources of energy so they are less dependent on it," Semyonov said.

Speaking in Moscow on Thursday night, Chávez offered assurances that Venezuela had no interest in building a nuclear weapon and only wanted peaceful nuclear technology. He described the collapse of the Soviet Union as a "catastrophe" and launched a familiar attack on the United States, denigrating it as a "Yankee empire".

Chávez went for a spin in a Lada car, causing miles of gridlock on Moscow's traffic-clogged streets. Before heading to the airport Chávez handed Medevedev several gifts. They included three bars of chocolate, banana jam and a tin of cocoa.