Venezuelan President, Hugo Chavez announced on Sunday that commencing later this year, Oil production will be increased by 300,000 barrels per day. The country will see "an important jump around the end of the year: about 300,000 barrels a day," Chavez said, according to a statement from the President's office.

While Venezuela states it presently produces about 3 million barrels of crude oil daily, an estimate from OPEC and the International Energy Agency says Venezuelan oil production is about 2.2 million to 2.4 million barrels a day. Based on reports, Venezuela's financial system is in recession. And as it deals with electricity issues and water shortages and rising inflation, more contraction of the economy is expected this year. As part of an OPEC agreement in 2009, Venezuela agreed to reduce output by nearly 400,000 barrels daily to lower production and reduce supply amid low demand, due to the global economic recession. Last month, the Venezuela Oil Minister, Rafael Ramirez confirmed that Venezuela will uphold that OPEC agreement on production, but assured that the issue will be re-visited when the country deemed it necessary.

President Chavez, making comments via a televised program on Sunday, said that Venezuela could get around the OPEC quota agreements because other members are not able to produce as much as they agreed to produce.

He also said there would be another big increase in oil output in 2014. Venezuela, a member of the Organization of Petroleum Exporting Countries is known to exceed output quota. The country pumped 2.175 million barrels a day last month, according to Bloomberg data, or 189,000 barrels daily more than the allocation set in 2009, leaving Venezuela with about 225,000 barrels a day of unused capacity.

OPEC, supplying about 40 percent of the world’s oil, announced in 2008 the largest output cut in its history as the financial crisis caused worldwide demand to tumble. Since then members have strayed from their agreed limits with rising oil prices, trading around $70 a barrel in New York today.

Meanwhile, Venezuela is increasing its use of thermoelectricity and has started to ease a power rationing program that began when a drought reduced the power-generating capacity of its hydroelectric plants.

President Chavez said on Sunday that, for the first time the country is supported by more than 5 gigawatts of thermoelectric power, a result of recent projects to link more thermoelectric plants to the national grid. He also said that some of the rationing is now being peeled back as the beginning of the rainy season re-fortifies the reservoir used to supply the country's main hydropower plant, the Guri.

The rationing is reportedly taking its toll on the economy, which shrank 3.3% last year and is expected to contract again in 2010. A reduction in economic output has led to shortages of some products, making a long-running inflation problem even worse. Annually, consumer prices are rising at a 30% clip, which is one of the world's highest rates.

Apart from rationing, the government has also been seeking long-term solutions by increasing its installed electricity capacity, which could prevent another emergency in the coming years. Venezuela presently has 24 gigawatts but plans to have 30 gigawatts by the end of 2010.