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Chavez unveils $130 billion oil expansion

Aug. 23, 2012 at 9:43 AM   |   Comments

CARACAS, Venezuela, Aug. 23 (UPI) -- Venezuelan President Hugo Chavez, seeking re-election Oct. 7, says he plans to spend $130 billion over six years to double the country's daily crude oil output.

Venezuela produces about 3 million barrels per day when its state-controlled hydrocarbons industry operates normally. However, production has slumped in recent years.

The June government figure of 2.8 million barrels per day contrasted with industry reports of 2.3 million bpd, OPEC and other data indicated.

Recent years have seen disruptions in Venezuela's oil sector because of the lingering effects of nationalizations and large-scale dismissals of oil experts and workers and an economic downturn across the board.

The government says it has yanked Venezuela out of a third year of recession, which it blames partly on drought and resulting power shortages. Officials have yet to release updated statistics on the economic recovery.

Venezuela is the fifth largest oil exporting country with the second-largest reserves of heavy crude oil after Canada.

Chavez announced the ambitious energy expansion program while on the presidential re-election campaign trail. His announcement of the planned investment was made in a televised address from the Orinoco Oil Belt, which is likely to receive most of the new investment.

Of the $130 billion earmarked for investment, Chavez said, about $5 billion will be spent this year.

Chavez says he's fully recovered from cancer that kept him away from presidential activities in Cuba.

During the long absences from Caracas, Chavez retained control of the presidency, delegating only some secondary duties to his aides and staff.

Venezuela's confirmation as a full member of the Mercosur trade bloc last month, viewed with skepticism by critics because of a controversial chain of events that made it possible, is touted by the re-election campaign as a passport to greater economic strides.

Venezuela's membership of Mercosur was delayed due to a series of obstacles, the last one being opposition from Mercosur member Paraguay's legislature.

That hurdle was removed when Mercosur suspended Paraguay's membership in response to impeachment and removal of Fernando Lugo from the presidency and appointment of his deputy Federico Franco as successor. Mercosur views the change as a constitutional coup.

The dispute has soured relations between Mercosur members and stymied talks toward a trade pact with the European Union.

Despite that ongoing crisis, Chavez has embarked on building Venezuela's regional profile. Opposition critics say the exercise is little more than an attempt by Chavez to secure his election.

The investment program leaves unanswered key questions posed by critics over the economy's direction and income disparities.

Chavez has vowed to intensify his Bolivarian revolution, a populist form of social and economic change, funded by increased oil income.

Opinion polls suggest Chavez's main electoral rival Henrique Capriles, 40, continues to make significant gains.

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