Chavez vows full oil production will resume

Friday, January 3, 2003

CARACAS, Venezuela -- President Hugo Chavez said Venezuela's oil industry, paralyzed by a five-week strike, is recovering and will reach full capacity in 45 days. Oil executives scoffed at the claim and said exports were still a trickle of pre-strike levels.

Oil represents 30 percent of Venezuela's $100 billion gross domestic product and 70 percent of exports. Venezuela is the world's fifth-largest oil exporter and a major provider to the United States. The 32-day-old strike has helped push international oil prices above $30 per barrel.

In Brazil, where he attended Wednesday's inauguration of President Luiz Inacio da Silva, Chavez told reporters Thursday that Venezuela is producing 800,000 barrels of crude a day, up from 200,000 barrels at the low point of the strike.

"We are at 800,000 and we are going to recover our full capacity of 3 million barrels a day" within 45 days, Chavez said.

In Venezuela, striking executives with the state owned oil monopoly Petroleos de Venezuela, or PDVSA, insisted production was 190,000 barrels a day. Fewer than 10 oil tankers have left the oil city of Maracaibo since the strike began Dec. 2, compared to more than 50 in a normal month.

Independent analysts saw little change in production in a country that has been forced to import gasoline from Brazil and Trinidad.

"We don't see any evidence that production is increasing, and no one in the industry would accept the higher figures since exports are still almost zero," said John Lichtblau, chairman of the Petroleum Industry Research Foundation Inc. in New York. "The crisis continues and there is no sign of improvement."

Venezuela's opposition called the strike to demand that Chavez call a nonbinding referendum on his presidency in February. Chavez refused, saying that under Venezuela's constitution the opposition can call a binding vote in August, halfway into his six-year term.

Opposition leaders blame Chavez's leftist policies for a severe economic recession and accuse him of trying to accumulate too much power. Chavez says his opponents want an "economic coup."

Negotiations sponsored by the Organization of American States were set to resume late Thursday.

In Washington, the U.S. State Department urged both sides to show "maximum flexibility."

"We've been in close touch with both sides of this and we've urged them both to demonstrate maximum flexibility at the negotiating table," said State Department spokesman Richard Boucher. "We're very concerned about the possibility of violence and we think they really need to take advantage of this opportunity for dialogue."

Chavez also announced a plan to involve European and Latin American countries in the negotiations. The "Group of Nation Friends" would involve the Organization of Petroleum Exporting Countries, he said.

Chavez said the government is hiring replacements for some of the 35,000 striking PDVSA workers. PDVSA executives insisted the government can't restore operations without thousands of experienced managers, tugboat captains, drilling field hands, tanker crews and dockworkers.

Chavez said Silva was considering a request to send experts from Brazil's state-owned oil company to replace some of the Venezuelan strikers.

The strike has forced motorists to line up by the hundreds at service stations. In some areas, lines were shorter Thursday, suggesting the government made headway in stabilizing gas distribution, though at low levels.

Chavez suggested that Latin American state oil companies should increase cooperation and create a company called Petro-America.

"It would become a sort of Latin American OPEC," Chavez said. "It would start with Venezuela's PDVSA and Brazil's Petrobras" and include state firms in Colombia, Ecuador and Trinidad and Tobago.

Venezuela's opposition called Thursday for a tax boycott to compel Chavez to call a referendum. The government warned that tax evaders can face anywhere from six months to seven years behind bars.

Strike organizers hope a steep recession, lost oil revenue and a tax strike will throttle Chavez's administration, which already has been forced to review its $25 billion budget for 2003.

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