The announcement came even while Venezuela's tax agency, Seniat, investigated private oil companies that have declared losses and have not paid income to the government in years.

Seniat officials said only 10% of the 33 high-cost operating contracts had paid taxes this year. Seniat suspects that declaring losses might be a way for the companies to skip taxes and is making a thorough investigation of the companies' records.

Chavez said the government would be strict in its investigation and even harsher if it discovered that companies had not paid.

Chavez warning

"There are operating contracts that do not pay income tax," Chavez said. "We could even charge retroactively."

Venezuela signed 33 operating service agreements in the 1990s with companies such as ChevronTexaco, British Petroleum, Total, Petrobras, Repsol YPF and Royal Dutch Shell.

Under the contracts – which have a combined output of 500,000 barrels per day (bpd) – companies operate marginal fields for a fee.

Private firms

Private companies produce about 40% of Venezuela's oil output, or 1.1 million bpd.

State-run Petroleos de Venezuela is considering rejecting the budget for operating agreements because it pays a higher price for them - $18 a barrel - than in the company's low-cost fields, which cost $4 a barrel. Its review of the contracts should be finished in six months.

But analysts warn that if the projects are constrained, Venezuela will have difficulties in meeting its target of pushing its current output to 5 million bpd by 2009.

Venezuela is the world's fifth largest oil exporter and officials say it produces 3 million barrels of crude a day. But analysts say that production is closer to 2.6 million.