Petroleos de Venezuela (PDVSA) would be broken into PDVSA East and PDVSA West, Energy Minister Rafael Ramirez said in an interview with The New York Times.
The six-week strike led by right-wing business groups and unions to force the democratically elected President Hugo Chavez from office has severely cut Venezuela's oil production from its usual 3.1 million barrels per day.
Mr Ramirez said the plan would also cut about $1bn in "exorbitant bureaucratic costs" by cutting many middle- and upper-level management posts.
Venezuela is the world's fifth largest oil exporter and supplies about 13% of US needs.
The strike, combined with fears of a US war against Iraq, has pushed oil prices above $30 a barrel.
Production increasing
The minister said Venezuela was pumping 800,000 barrels a day, but analysts estimate the figure is closer to 400,000, while the opposition claims it is only 200,000.
However, the figures indicate that production is slowly but steadily increasing after a near standstill a few weeks ago.
Mr Ramirez said the strikers had succeeded in showing the company could operate with a much reduced workforce.
Dissidents isolated
The break-up would isolate the dissident managers based in the capital Caracas.
PDVSA President Ali Rodriguez said last week that the government planned to cut some 6,000 jobs in Caracas, a centre of anti-Chavez resistance, and in the western oil town of Maracaibo.
Mr Rodriguez, the former head of the oil cartel Opec, said he would run PDVSA, with lieutenants overseeing the eastern and western operations.
He also indicated PDVSA might sell non-core assets like US subsidiary Citgo.
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