The construction of a methanol-production facility, with an annual capacity of 1.6 million tons of methanol, in the town of Assaluyeh on the Persian Gulf coast, is expected to be completed in 2011.
"The nations of Iran and Venezuela are developing their countries and trying to form a new world for themselves and other free nations," the IRNA agency quoted Ahmadinejad as saying during the launch ceremony.
The $700-million project will be implemented by Iranian and Venezuelan contractors, with 51% of the stake belonging to Iran and 49% to Venezuela. The countries have also agreed to build a similar plant in Venezuela.
Chavez arrived in Iran Saturday on a two-day visit, his third in the past two years.
Chavez has repeatedly declared his support for Iran's peaceful nuclear research, which has come under tough international sanctions, as the United States and some other Western countries suspect the Islamic Republic is pursuing a covert nuclear weapons program and are demanding a halt to its uranium enrichment.
"Developing nuclear energy for peaceful ends poses no global threat. The real threat is represented by the nuclear arsenals of the U.S. and its allies. They should be the first to serve as an example by destroying their stockpiles of weapons of mass destruction instead of persecuting Iran for its ambitions towards technical progress," Chavez earlier said.
In response to the statement, Ahmadinejad called Chavez his brother and leader in the struggle against American imperialism.
Tehran and Caracas signed a joint declaration on a strategic alliance during Iranian President Mahmoud Ahmadinejad's visit to Venezuela last September, and clinched a series of deals on economic cooperation, including in the oil, metallurgical, machine-building, and pharmaceutical industries, as well as on cultural and educational projects.
The countries have set up a $2 billion fund to implement the projects.
