VENEZUELA HAS PLAN TO PEG OIL AT $50 A BARREL

MARK MILNER, GUARDIAN - Venezuelan president Hugo Chavez is poised to
launch a bid to transform the global politics of oil by seeking a deal
with consumer countries which would lock in a price of $50 a barrel. A
long-term agreement at that price could allow Venezuela to count its
huge deposits of heavy crude as part of its official reserves, which
Caracas says would give it more oil than Saudi Arabia. "We have the
largest oil reserves in the world, we have oil for 200 years." Mr Chavez
told the BBC's Newsnight program in an interview to be broadcast
tonight. "$50 a barrel - that's a fair price, not a high price.". . .

According to US sources, Venezuela holds 90% of the world's extra heavy
crude oil - deposits which have to be turned into synthetic light crude
before they can be refined and which only become economic to operate
with the oil price at about $40 a barrel. . . A $50-a-barrel lock-in
would open the way for Venezuela, already the world's fifth-largest oil
exporter, to demand a huge increase in its official oil reserves -
allowing it to demand a big increase in its production allowance within
OPEC.

http://www.guardian.co.uk/venezuela/story/0,,1745707,00.html

JUAN FORERO, CARACAS, NY TIMES - President Hugo Chávez is spending
billions of dollars of his country's oil windfall on pet projects
abroad, aimed at setting up his leftist government as a political
counterpoint to the conservative Bush administration in the region.
With Venezuela's oil revenues rising 32 percent last year, Mr. Chávez
has been subsidizing diverse items like samba parades in Brazil, eye
surgery for poor Mexicans and even heating fuel for poor families from
Maine to the Bronx to Philadelphia. By some estimates, the spending now
surpasses the nearly $2 billion Washington allocates annually to pay for
development programs and the drug war in western South America. . .