By JUAN FORERO
 
CARACAS, Venezuela - Seventeen months after an antigovernment strike crippled production, Venezuela's state oil company, Petróleos de Venezuela, has made what analysts call a Herculean return.

Though energy experts say production remains below prestrike levels, the oil-and-gas monolith is, once again, one of the world's great producers of crude. Its giant refining arm is talking of adding two refineries to the three already operating in the United States. The company says it is embarking on a strategy, heavily dependent on foreign oil companies, to nearly double production by 2009.

All this is part of a grand design made possible largely by sky-high oil prices, which have nearly doubled the expected revenue of Pdvsa (pronounced peh-deh-VEH-sah), as the company is known.

But while Pdvsa's talk of foreign investment and ramped-up production is welcome in the boardrooms of the world's biggest oil companies, in recent months much of the new earnings have been siphoned from exploration and production projects that some energy analysts say Pdvsa needs to recover fully from the strike. Instead, the windfall is financing a social revolution long promised by President Hugo Chávez's 5½-year-old government to extricate the country from its malaise and ease life for the poor, an effort that had been hobbled by the strike and a 2002 coup that temporarily ousted the firebrand leader.

And with the Aug. 15 recall referendum that could end Mr. Chávez's presidency drawing ever nearer, the spending spree - on everything from housing to railroads, health clinics and literacy programs - is an increasingly important, and successful, tool for solidifying support for Mr. Chávez. Recent polls show he could squeak to victory.

Pdvsa's new role has raised eyebrows among oil executives and in Washington, which has long counted on Venezuela as one of the four big exporters of oil to the United States and which has been hoping Pdvsa will help curtail the reliance on Middle Eastern crude.

The company that has emerged from the ashes of the strike that ended in February 2003 is nothing like the button-down, corporate-style company that in the 1990's was often the No. 1 provider of foreign oil to the United States.

Gone is the by-the-book giant, which had $42 billion in sales, according to filings with the Securities and Exchange Commission last October. Gone is the multinational whose managers once proudly compared Pdvsa to Exxon Mobil. Gone, too, are 18,000 experienced executives and managers who were fired for their role in the strike.

So is the autonomy the company once wielded, replaced by a highly centralized management controlled by the Ministry of Energy and Mines.

The new Pdvsa seems to be in no rush to pump more oil to ease the supply squeeze that helped contribute to a price of $42 a barrel in early June and caused so much consternation for American energy officials.

Nor is it moving fast toward deals with foreign oil companies, though Pdvsa officials insist they want private investment as long as the terms are beneficial to Venezuela.

"We do not need them at any price," said Bernard Mommer, an executive at Pdvsa who has advised the company and the Ministry of Energy and Mines on how to realign the company. "Some of them believe they can carry on as they did in the past. No way."

For now, Pdvsa is awash in cash. Its oil revenue in 2004 will top $7 billion, according to an estimate by LatinSource, a network of economists based in New York.

The government recently announced that $2 billion in Pdvsa revenue would bypass the central bank and form a special development fund to pay for public projects like a hydroelectric plant and a new state airline. Another $1.7 billion - taken from Pdvsa's $5 billion capitalization budget - is going to social programs, Rafael Ramírez, the minister of energy and mines, announced.

Some oil experts warn that huge expenditures like these will permanently damage a company that needs to spend up to $3 billion annually just to keep production stable.

"What they're doing is just maintaining output," said Ramón Espinasa, a former chief economist at Pdvsa who is now an oil consultant for the Inter-American Development Bank. "They stopped the fall, but there's no growth in production."

Still, many oil analysts and executives of large oil companies doing business here are taking a wait-and-see attitude, saying that with the big influx of revenue, Mr. Chávez's government may be able to spend big and still run the company.

"These things don't ever come easily, but the steps they've taken are generally correct," said Peter Hill, chief executive of Harvest Natural Resources of Houston, a small oil concern that has invested $1 billion here since 1992. "I believe in the concept of what they're trying to achieve. I think we can contribute to that."

To fulfill its social goals, Pdvsa needs foreign companies to play a crucial role in developing new oil fields, drawing more crude from old ones and developing natural gas fields, which contain the largest deposits in Latin America.

The company said late in 2003 that it needed to invest $36 billion by 2008, capital that oil experts said would have to come largely from private companies. Venezuela has the largest proven oil reserves outside the Middle East, and interest is high among some of the world's biggest companies, energy experts say.

"The private sector is literally lining up at the ministry's door," said David Voght, managing director of IPD Latin America, an oil company consultancy in Caracas. "Now it's up to the government to effectively manage these offers."

The future lies in developing the oil deposits under the vast grasslands of north central Venezuela, the so-called Orinoco Belt, which oil executives believe may contain more oil than all of Saudi Arabia. In the mid-1990's, when Venezuela was opening up to foreign investment, companies like Exxon Mobil, ChevronTexaco, ConocoPhillips, Total of France and Statoil of Norway came to the Faja, as the belt is known in Spanish.

Half a million barrels a day are produced there now, under an old law requiring companies to pay a 1 percent royalty on the first nine years of 35-year contracts; it is part of an old royalty structure intended to lure investors who might have been put off by the Faja's tar-like oil, which is expensive to extract and refine.

Though any new projects in the Faja will fall under a 2001 hydrocarbons law that raises royalty rates to at least 20 percent and, for the first time, makes Pdvsa a majority partner, companies remain eager, hoping that they can negotiate lower royalty rates and features in the contracts that reduce Pdvsa's role, industry representatives said.

"We have decided to be in Venezuela, with the patience required," said Tor Espedal, president of Statoil's Venezuela division.

Yet, despite terms generally more favorable to Pdvsa, negotiations with the company, over the Faja and beyond, often go grindingly slow.

Even at companies like Total that are moving toward a deal, executives describe tough negotiations that leave them wondering how committed Pdvsa really is to expanding the role of private companies.

"We are proposing to invest in a $4 billion project immediately, and we agree to work in terms of the new law," said Jean-Marie Guillermou of Total's Venezuela operations. "Normally, a country would want to jump on this. They don't do it. Why?"

Mr. Mommer, the Pdvsa adviser who also counsels the Energy Ministry, said the company wanted to be cautious and avoid giving out the sweetheart deals he said Pdvsa executives handed out before Mr. Chávez became president.

"This will not be repeated," he said.

Some oil executives and analysts say Pdvsa has become a more secretive company, unwilling to release the same kind of financial and production information that it would readily provide in the past.

Independent energy experts also discount assertions by company officials that Pdvsa is fully recovered from the 2003 strike. Oil executives who work with Pdvsa say that the previously nimble company can take three times as long as a private company to drill a well and that its managers, though capable, lack the knowledge of the fired executives.

And they question Pdvsa's claims that it is producing more than three million barrels of oil a day. Analysts relying on import-export data and public rig-count records say it is producing 2.5 million a day, or a little more, at most.

"Coming back after the strike to reach 2.5 to 2.7 million barrels is pretty heroic," said Lawrence J. Goldstein, president of the Petroleum Industry Research Foundation, an industry-supported analysis group in New York. "They should get credit for that, but we do not believe their numbers."

Mr. Chávez's public pronouncements have done little to assuage industry concerns. He has railed against the Bush administration, accusing it of coveting Venezuela's resources, and in March he even threatened to withhold oil if the Bush administration tried an invasion.

Yet, days after the threat, he warmly greeted ChevronTexaco executives at a ceremony at the presidential palace to celebrate the granting of a gas exploration license.

Analysts said that with Venezuelan oil providing billions more dollars than expected, Mr. Chávez probably feels he has the freedom to move slowly on signing contracts while focusing instead on social spending.

"Right now, Pdvsa is not a mercantile entity," said Antonio Szabó, a former executive at Pdvsa who left long before Mr. Chávez came to power and who is now chief executive of Stone Bond Technologies, a Houston software and energy consulting firm. "Right now, it's an instrument of the Venezuelan government."