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Venezuela plans to ride oil to economic growth

CARACAS, VENEZUELA - Venezuela aims to ramp up oil production to an average 3.6 million barrels per day in 2005 to generate 5 percent economic growth and build on this year's oil-driven recovery, according to the government's draft budget for next year.

The 2005 forecasts, which Finance Minister Tobias Nobrega made available to Reuters on Thursday before their scheduled Oct. 15 presentation, compared with projected 3.4 million barrels per day oil output for this year by the world's No. 5 petroleum exporter.

But many analysts believe that the government's oil figures are inflated and that the OPEC producer is still struggling to fully restore production after a crippling general strike early last year that rocked its petroleum industry.

"I will believe it when I see it. ... You have to wonder where it's going to be coming from," said one international oil industry expert, who asked not to be named.

In fact, Bloomberg News reported that the president of Venezuelan state-owned oil company PetrĂ³leos de Venezuela, Ali Rodriguez, said Friday that PDVSA can't boost oil production significantly at present because of the continuing impact from the strike.

While President Hugo Chavez's government says it has restored oil production to levels well above 3 million barrels per day since the strike, industry analysts say real production this year is running around 2.6 million to 2.7 million.

But no one disputes that soaring world oil prices, which rose over $53 a barrel last week, are strongly propelling the Venezuelan economy out of a two-year recession.

The government is forecasting gross domestic product growth for 2004 at between 10 percent to 12 percent following contractions of 7.6 percent and 8.9 percent in 2003 and 2002 respectively.

Left-wing populist Chavez, his position strengthened after he won an Aug. 15 referendum on his rule, has been pumping tens of millions of petrodollars into health, education and development programs.

"2004 has been a year of recovery," Nobrega said in an interview late Wednesday.

"The message for 2005 is that it will be both a year of capital and social investments, but there will be savings as well," the finance minister added.

The 2005 draft budget forecasts inflation for the year of 15 percent and a fiscal deficit between 1 percent and 1.5 percent of GDP.

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