Venezuela's oil industry showed renewed signs of decline in this year's performance so far amid fresh scandals over abuse of the country's oil revenues.

State-run oil corporation PDVSA sacked half of the directors on its board after the energy giant's pension fund was found to have lost $453 million in a Ponzi scheme linked to an investor in Connecticut. It was the latest of financial woes to strike the troubled oil company. The fraud apparently took place in 2004 but was discovered only recently.

President Hugo Chavez, who ordered the firings, has set sights on re-election next year for a third six-year term. His aides were quick to reassure Venezuelans the government will use oil cash to make amends over the pension fund losses.

PDVSA, already facing huge compensation bills running into several billion dollars over government blunders during nationalization, now needs to handle the delicate and politically explosive task of confronting employees, former employees and the media over the pension fund fiasco.

In the meantime, the company's income from oil exports is set to continue declining unless there is a dramatic turnaround, which isn't likely for some time.

Venezuela's net crude oil and refined products exports fell 4.5 percent in April from a year earlier to 2.14 million barrels a day, the oil ministry said last week. The country produces about 2.8 million barrels a day but that figure is up for revision amid declining output.

Venezuela has struggled to get international investors interested in its future exploration and expansion plans for the hydrocarbon industry. Past blunders over state seizures of foreign oil assets have increased PDVSA's liabilities by several billion dollars.

Dismissals, demotions and removal of key energy experts and other employees have taken their toll on efficiency in the state-run organization. The company may have to pay in excess of $1.5 billion in compensation claims and other large amounts to former partners affected by nationalizations. Among those in line for huge payouts for nationalized assets is Exxon Mobil Corp., which is likely to demand at least $3.7 billion in compensation.

Although PDVSA officials insist all compensation claims will be considered and pension fund losses will be covered, the more pressing question for the company is its declining performance. The action at the board level will likely not remove deeper issues with productivity, analysts said.

In the board reshuffle, PDVSA removed the head of finance Eudomario Carruyo, internal director of production Luis Pulido, planning director Fadi Kabboul, head of gas Carlos Vallejo and research director Hercilio Rivas, a decree in Venezuela's Official Gazette said.

Carruyo's removal was interpreted by industry analysts as an attempt by Chavez to bury the scandal, which surfaced after a Securities Exchange Commission investigation in the United States found Venezuelan-American Francisco Illarramendi used investors' money to cover losses.

But in a May 10 letter to the National Assembly, Carruyo said Illarramendi's actions had little to do with the PDVSA board as he wasn't employed directly by the oil company. Instead, Carruyo told the lawmakers, Illarramendi worked for PDVSA while employed by another company.

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