Following his visit to Tokyo earlier this week, Venezuelan President Hugo Chavez told reporters in Beijing that Japan would also join Venezuela in financing larger projects aimed at bolstering Venezuelan oil and gas production and increasing exports to oil-hungry Japan.

Chavez said he wants to increase exports to Japan to 1 million barrels per day.

The $4 billion infusion by Japan comes at a time when Venezuela is in certain need of additional cash to continue supporting its wide-ranging social programs for the country's poor. For years, the leftist Chavez used Venezuela's windfall oil profits to fund social spending.

However, with the price of oil plummeting more than $110 from an all-time high of $147 per barrel in July 2008, Venezuela's state-run oil company, Petroleos de Venezuela SA, announced severe cost-cutting measures hoping to avoid additional cuts in educational and medical programs that have made Chavez particularly popular among the country's less fortunate.

Venezuela's budget for 2009 was created with a $60-per-barrel price tag in mind. But with prices hovering in the $30-to-$40 range, the Chavez administration has admitted that its social efforts, both at home and abroad, would surely suffer.

While Chavez has expressed optimism amid Venezuela's economic woes, there has been some talk in Caracas of devaluing the national currency -- which was set at 2.15 bolivars to the U.S. dollar at the beginning of last year and had been pegged at 2,150 bolivars to the dollar since 2005 -- to offset capital shortages at home.

Last month PDVSA President Rafael Ramirez said the company would reduce costs by cutting back on contracts to service companies whose "high prices" are no longer affordable with oil costing less than two-thirds of its all-time high.

In another effort to stem losses caused by falling oil prices, PDVSA in January announced it was discontinuing shipments to two southern U.S. refineries, Sweeney and Chalmette.

Downplaying the drop-off of exports to the United States, Chavez maintains they are part and parcel of his plan to continue reducing exports to the United States while increasing those to oil-hungry countries like Japan and China.

In February Venezuela and China broadened their existing oil development agreement, pledging $8 billion of a $12 billion joint Chinese-Venezuelan fund to improve oil production in Venezuela in the hopes of increasing exports to China as well as improving production capacity across the board at PDVSA.

Since assuming office in 1998, Chavez has made a priority of courting oil-hungry China and laying the groundwork for an expanded energy relationship.

Closer energy relations have resulted in a significant increase in fuel exports to China during a time when oil exports have decreased to the United States, which still remains Venezuela's largest customer.

"It shouldn't be surprising that Venezuela is looking for funds as the price of oil declines and there is no improvement (forecast) in the short term," Roger Tissot, an associate consultant with Gas Energy Latin America, told United Press International in February.

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