Venezuela improves terms for Carabobo oil project

* Venezuela plans production from Orinoco tender by 2012

* Caracas sets more favorable financial terms

* Moving initial output forward could boost oil cash flow

By Marianna Párraga

CARACAS, Oct 30 (Reuters) - Venezuela has extended the timeline for production from Carabobo oil project so that participation in the Orinoco belt tender would be more attractive for companies interested in bidding, sources close to the process said.

Conditions given by the Energy Ministry to investors set a timeline for finishing the initial stages of the Carabobo project and producing crude blends by 2012, the sources told Reuters on Friday.

The change in terms of the much-delayed Carabobo project, which is now due to be auctioned in January, is part of Venezuela's ongoing effort to attract interest in the project as the OPEC nation faces lower oil revenues due to the global recession and weaker prices of crude oil.

The new timeline allows companies producing from the Carabobo two years of "early production"-- that is, without using an upgrader to refine the Orinoco's tar-like heavy crude -- compared with the one year allowed under previous terms.

The new terms also allow four years, as opposed to three previously, for the completion of a crude upgrader, they said.