Chavez's allies start pumping Venezuelan oil

* Projects by India, China and Belarus produce 47,000 bpd

* Chavez' oil diplomacy wins friends

* Critics say most capable firms excluded from projects

CARACAS, Sept 14 - Some projects Venezuela's President Hugo Chavez has handed allies under his "oil diplomacy" policy are now pumping crude, in spite of criticism the decisions were arbitrary and exclude the most capable firms.

Five fields of the dozens assigned bilaterally began producing 47,000 barrels per day in September, according to state oil firm PDVSA documents on Monday.

Since 2006, Venezuela has handed out dozens of oil blocks to countries from Vietnam to Uruguay, in a bid to win goodwill for the controversial president from the countries that benefit from access to some of the world's largest oil reserves.

In addition, companies may feel protected from sudden rule changes by their closer ties to the government.

Until recently, the firms involved have only been allowed to certify reserves on their blocks, but after paying steep start-up bonuses, several companies are now producing crude.

In one of the highest-profile such deals, Venezuela last week created a $20 billion joint venture with Russia that may eventually produce up to 450,000 barrels per day of oil.

Critics say the practice of directly assigning blocks puts Venezuela's oilfields in the hands of nations, such as Belarus, which have little experience in developing them.

Chavez says he offers great terms to allies, although the Energy Ministry charges up to $1 billion to allow projects to get off the ground and the contracts are not made public.

"We'll charge you a friend's price, we'll treat you like brothers, payment terms that you'll not be offered anywhere else in the world," Chavez promised Uruguay earlier this year.

The socialist Chavez nationalized the OPEC nation's oil industry in 2007 by forcing oil companies to take a minority share in projects and he has since brought many oil service companies under state control.

Meanwhile, the first public tender for a major oil project since the nationalizations was suspended this year after healthy initial interest faded as crude prices tumbled.

Oil firms including U.S.-based Chevron <CVX.N>, Britain's BP <BP.L> and France's Total <TOTF.PA> had been expected to bid for the 200,000 bpd project. The tender may go ahead later this year.

"We are aware that there are two parallel processes here, but one should not affect the other," said a top official at Venezuela's energy ministry, referring to the tender and assignations.

INDIAN OIL

Now after years of certifying reserves, some of the projects are producing oil, while others are moving forward.

The bulk of the 47,000 bpd production comes from Petrolera Indovenezolana, a joint venture with India's ONGC <ONGC.BO>, which is producing 30,000 bpd.

Two other joint ventures with Belarus' Belarusneft and China's CNPC produce a total of 17,000 bpd.

Venezuela says the Junin 6 project will produce up to 450,000 bpd, starting in 2012 after a $20 billion investment.

Venezuela charged the Russian consortium a $1 billion starting bonus for access to the oil field.

The Russian side of the joint venture includes Rosneft <ROSN.MM>, Gazprom <GAZP.MM>, Lukoil <LKOH.MM>, TNK-BP <TNBPI.RTS> and Surgutneftegaz <SNGS.MM>.

Another project where work has begun is Junin II, which is being developed with Petrovietnam and aims to start producing by 2011.

The terms of these deals are rarely made clear, although Venezuela usually keeps a majority stake in any joint venture.

Sources in Venezuela and Vietnam say PDVSA asked Petrovietnam to pay between $500 million and $600 million to start work at Junin II.