"It's necessary to continue expanding oil production, but taking care of the price variable and managing the balance. he told a business forum."

It was one of the very few references Chavez made to Venezuela's largest industry in a 90-minute speech to international and local businessmen.

Chavez, who takes office on February 2, has made it clear that he intends to bring Venezuela back into the fold of the Organisation of Petroleum Exporting Countries (Opec), where at has frequently been criticised. Venezuela, which under the current leadership of state oil company Petroleos de Venezuela CA (PdVSA), is carrying out an aggressive output-expansion policy aimed at boosting market share.

The Opec producer, however, fell short on its commitment to cut output by 525000 barrels per day in a bid to boost flagging oil prices.

Chavez has said hasgovernment will comply with the output cuts and would be prepared to extend them to the end of 1999.