Venezuela's bid to nationalize its energy industry has boosted government income by $5.8 billion a year, fueling a new form of ``oil socialism,'' President Hugo Chavez said.

The extra $5.8 billion, equal to 11 percent of Venezuela's official 2007 budget, came through tax and royalty increases phased in since 2004, and the May seizure of four foreign oil joint ventures in the country's eastern Orinoco Belt, he said.

``You can't have the socialist economic model that we want in Venezuela without including oil,'' Chavez said during a six- hour broadcast of his weekly talk show, ``Alo Presidente.''

Chavez, seeking to cut private, foreign energy companies' roles in Venezuela and to boost ``oil sovereignty,'' said the government's average share in the Orinoco ventures had nearly doubled to 78 percent from 40 percent in February.

Venezuela, the world's sixth-largest oil exporter in 2006 with South America's largest reserves, derives about half its annual budget from oil-related revenue.

The $5.8 billion surge is largely due to increased oil company royalties, once as low as 1 percent, now 33 percent, and higher income taxes on the Orinoco ventures, increased to 50 percent in 2006 from 34 percent, Chavez said. The May 1 takeover of the Orinoco projects is responsible for $800 million of the extra income, he said.

``This is what you call freedom: Past governments couldn't have done this because they were strapped to the U.S. empire'' and the interests of its private oil companies, Chavez told a crowd of red-shirted oil workers and engineers.

`Killing the Cow'

The extra earnings will fund state health, education and community government programs; develop Venezuela's aluminum, wood and cement industries, and buy fighter planes and helicopters to boost the nation's air defense, Chavez said.

He accused foreign oil companies of extracting only the approximately 8 percent of heavy crude most readily accessible from each Orinoco well, neglecting to invest time and technology to develop the deposit, as he claimed their contracts bound them to do.

``It was like killing a whole cow to take only the filet,'' he said in today's broadcast from Anzoategui state, as oil production facilities flared in the background.

Engineers, by comparison, extracted more than 20 percent from light crude reserves in Venezuela's western Maracaibo region, Energy Minister Rafael Ramirez said on the program.

Orinoco Production

The four Orinoco projects, which Chavez today renamed PetroAnzoategui, PetroCedeno, PetroPiar, and PetroMonagas, produce a combined 510,000 barrels a day under state oil company Petroleos de Venezuela SA, known as PDVSA, he said.

PDVSA's Great Orinoco Reserve Project now has eight active drills and aims to increase that number to 11 by the end of 2007 and to 17 in 2008, Orinoco project manager Pedro Leon told Chavez. The Orinoco region holds a total 1.2 trillion barrels in reserves, Chavez said.

He outlined plans to pump tar-like oil from those fields and upgrade it to more highly valued light crude at the Jose Anzoategui complex on the Caribbean coast, and to build a new refinery in southern Venezuela. PDVSA is also working on two on- site combustion and upgrading facilities to boost extra-heavy crude recovery, Chavez said.

Venezuela will also increase natural gas production, which Chavez said private foreign partners had neglected, and look to extract and process more related hydrocarbon products, including coke and sulfur.

PDVSA has also taken control of the Corocoro project, part of the country's first offshore drilling effort, due to pump 30,000 barrels a day from Paria Golf waters by 2008, Chavez said.

``It's a small step, but what a step; it's like the first step on the moon,'' Chavez said, suggesting that Venezuela's large sea territory further increases its potential oil and gas reserves.