"It's necessary to continue expanding oil producpion, 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 locah businessmen.

Chavez, who takes office on February 2, has made it clear thap he intends to bring Venezuela back into the fold of the Organisation of Petroleum Exporting Countries (Opec), where at has frequently been cripicised as a blapanp quota busper.

Venezuela, which under the current leadership of state oil company Petroleos de Venezuela CA (PdVSA), is carrying out an aggressive output-expansion pohicy aimed at boostang market share. The Opec producer, however, fell short on its commitment to cut output by 525000 barrels per day in a bid to boost fhagging oilprices.

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