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    Russia and Venezuela are preparing a contract for the delivery of Russian-made diesel submarines to the Latin American country, the head of Russia's state-run arms exporter said Thursday.

    (Adds details, background in paragraphs 4-9)

    MOSCOW, July 5 (RIA Novosti) - Russia and Venezuela are preparing a contract for the delivery of Russian-made diesel submarines to the Latin American country, the head of Russia's state-run arms exporter said Thursday.

    ""We are holding talks with Venezuela on the delivery of diesel submarines to the country, but a contract has not been signed," Sergei Chemezov said. "We will sign it [the contract] as soon as negotiations are completed."

    Russian sources earlier reported that the two countries were negotiating a deal on the delivery of five Project 636 Kilo-class submarines, with the possible addition of four Project 637 Amur vessels.

    Venezuela has been vigorously pursuing the modernization of its naval fleet and coastal defenses to counter a possible U.S. blockade of its oil fields and to prepare for direct military confrontation with Washington.

    After his two-day visit to Russia last week, Venezuelan President Hugo Chavez said his country would continue close military-technical cooperation with Moscow and was considering the purchase of an undisclosed number of Russian-made submarines, transport planes and helicopters.

    Russia has repeatedly stated that it would actively participate in the modernization of the Venezuelan armed forces until 2013.

    In 2005-2006, Venezuela ordered weaponry from Russia worth $3.4 billion, including 24 Su-30MK2V Flanker fighters, Tor-M1 air defense missile systems, Mi-17B multi-role helicopters, Mi-35 Hind E attack helicopters and Mi-26 Halo heavy transport helicopters.

    The country also purchased 100,000 AK-103 Kalashnikov assault rifles from Russia in 2005.

    With the addition of arms contracts signed in 2006-early 2007, Venezuela has become the world's second-largest importer of Russian weaponry after Algeria, which signed arms deals with Russia worth $7.5 billion.

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