By Jason Szep

BOSTON, Dec 10 (Reuters) - Standing on the deck of an oil tanker in Massachusetts Bay on Monday, Venezuelan energy officials kicked off the third year of a controversial program of delivering subsidized home-heating oil for the U.S. poor.

A Houston unit of a state-owned company backed by Venezuelan President Hugo Chavez, a foe of the Bush administration, will supply oil at 40 percent below market prices in 23 states, an expansion from 16 states last year.

The donations by Citgo Petroleum Corp, owned by Venezuelan state-owned Petroleos de Venezuela, are worth about $147 million at market prices.

Deliveries began arriving at homes just as a deadly ice storm swept the U.S. Plains and many Americans start to grapple with record heating bills to heat this winter.

"This is the biggest social program any oil company has ever done in this country," Citgo Petroleum president Alejandro Granado told reporters at a port in Braintree, Massachusetts.

"We didn't stop and think about politics. We need to share a little bit of our tremendous profits."

Flush with funds from soaring oil prices, Chavez has used Venezuela's petroleum wealth to secure closer ties with South American neighbors and in 2005 proposed the U.S. heating oil program to trim costs for America's poor -- a group he says President George W. Bush's government has neglected.

Chavez, who last year called Bush "the devil" in a speech to the United Nations, has called the heating oil donations "humanitarian aid" although Venezuela's per capita income is about 1/10th that of the United States.

The conservative editorial page of The Wall Street Journal harshly criticized the program last year for assisting "an anti-American tyrant at the expense of the Venezuelan people".

But Joseph Kennedy, a former Democratic congressman whose nonprofit Citizens Energy Corp is a major distributor of the heating oil, said the program has nothing to do with politics.

"The politics side of this is absurd," said Kennedy, the nephew of former president John F. Kennedy.

He noted that more than 10 percent of U.S. gasoline supplies come from Venezuela anyway, along with most of the heating oil and jet fuel in the United States.

"No one is saying any of that should be given up," Kennedy told Reuters. "The only time this discussion comes up is when we're talking about discounted heating oil for the poor."

"The price of oil has gone up 130 or 140 percent in the last four years and there are now hundreds of thousands of low-income folks who need this oil," he said.

Venezuela, the world's No. 5 crude exporter, supplies about 15 percent of U.S. oil imports.

The Venezuelan heating oil program comprises 112 million gallons of oil and is intended for 235,000 families drawn from low-income home energy assistance programs in the 23 states.

"To the degree that they have reduced the cost to the elderly and those who cannot afford it, this program is a good thing," said Sarah Emerson, managing director at Energy Security Analysis in Wakefield, Massachusetts. (Editing by Chris Wilson)

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