Is Chavez Taking Too Many Oil Risks?

Venezuela needs to invest to boost its oil output. But at $98 a barrel, why bother? Call it the Chávez conundrum

The world's largest oil-refinery complex sits on an arid peninsula off the western coast of Venezuela. The Paraguaná facility processes more than 700,000 bbl. of crude each day for the state-owned oil monopoly, Petróleos de Venezuela, S.A. (PDVSA), while tankers line up on the Caribbean horizon to ship it around the world. Towering burn-off pipes, as loud as jet engines, shoot flames above giant posters of President Hugo Chávez. His fist raised, he roars, "Of course we can!"

The question is, Does he really want to? Last year the government announced a $280 million plan to upgrade Paraguaná and increase its...

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