Chavez said he would like to expand PDVSA's workforce from 75,000 workers to nearly 102,000 in 2008 and to more than 120,000 in 2010. He said the company needs additional manpower to increase production to fund wide-ranging social programs.

Critics, however, say Chavez is funding national welfare at the expense of the long-term health of PDVSA.

The move is also viewed by some as an effort to win over Venezuelan voters ahead of the December referendum on proposed constitutional reforms. Among the reforms proposed by Chavez is the prohibition of political funding from foreign governments or public or private entities -- a move aimed at ending Washington's funding of Venezuelan groups opposed to Chavez -- the creation of a six-hour workday and the extension of social security benefits, all of which likely appeal to the country's predominantly poor working class, which forms the bulk of Chavez's power base.

Chavez and his supporters have taken it upon themselves to "play up the more popular aspects of the constitutional reform package," noted Patrick Esteruelas, a Latin America analyst for the Eurasia Group consulting firm, in a recent report.

The proposed expansion of PDVSA also plays to Chavez's efforts to curry favor with Venezuelans, said Sarah Ladislaw, an Energy and National Security Program fellow at the Washington-based Center for Strategic & International Studies.

"On the one hand, it would be helpful to increase the capacity of PDVSA �� but I don't know how much this helps them in the long term," she told United Press International, referring to reports the company has failed to adequately reinvest in maintenance and expansion over the last few years. Without the capacity to increase output, a higher payroll would do little to improve PDVSA.

But the addition of new employees would play to Chavez's efforts to reorganize PDVSA's workforce into a singular state-friendly union rather than the hundreds of small labor groups that are demanding improved benefits.

Last month a clash between Venezuelan oil workers and authorities prompted Energy Minister Rafael Ramirez to assure workers a new contract will be completed in the coming weeks; negotiations have been ongoing since April.

Ramirez, who is also the head of PDVSA, said the government is not against the workers but is rather working toward improving the agreement to make it mutually beneficial.

"We are working for an agreement that is good for workers and good for the state," Ramirez said following last week's unrest.

Anger over the delayed agreement erupted into violence when workers from two different refineries tried to present Ramirez with a document listing their demands and were intercepted by police in Anzoategui state.

Three workers were reportedly injured in clashes with police and 40 others arrested, according to local news reports.

PDVSA issued a statement saying it would investigate the incident and condemned the violence.

Critics of Ramirez and PDVSA say the government is trying to dissolve the hundreds of oil workers' unions in hopes of creating a unified federation that would ultimately weaken the bargaining power of the labor force operating the country's most lucrative export.

In the aftermath of the Anzoategui incident, Ramirez said oil workers would receive increased salaries and other benefits; however, other demands by the workers in last week's clash would have to be evaluated on a point-by-point basis.

(e-mail: [email protected])

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