Venezuela, which holds the world's largest crude reserves, is on track to suffer its steepest annual oil output drop in 14 years as it suffers the effects of an economic crisis and years of under-investment and mismanagement, according to data seen by Reuters and interviews with company sources and workers.

The state-run oil company, Petroleos de Venezuela (PDVSA), is struggling to stem a production decline that has accelerated this year as a result of payment delays to suppliers, lack of investment in equipment, and poor planning in the country's vast oil fields.

In the 12 months to June, Venezuela's crude output fell 9% to 2.36 million barrels per day (MMbbl/d), while OPEC has boosted its output by 4%, according to the group's official figures.

Venezuela's oil minister and PDVSA's president, Eulogio Del Pino, last month confirmed a 220 Mbbl/d production decline -- about 8%-- so far this year compared with 2015.

However, he said the "circumstantial fall" had been "contained." The Oil Ministry later said the country's output rebounded in July to 2.54 MMbbl/d, without giving comparative figures. The data have not yet been reported to OPEC.

PDVSA's statistics have been a matter of debate for years.

Internal trade and supply data seen by Reuters show that PDVSA's crude exports, which account for 94% of the country's hard currency income, fell to 1.19 MMbbl/d in July, excluding independent sales made by its joint ventures (JV).

PDVSA did not respond to a request for comment on its sales to customers.

Several PDVSA workers and local union members, in interviews with Reuters, said that an increase in equipment theft, maintenance delays, low salaries, and what they called a sense of "abandonment" of some oil fields are continuing to hit production.

"I have never seen so much inefficiency in my 28 years in the oil industry," said a worker of a drilling firm hired by Petroboscan, a project with participation of U.S. Chevron that is one of more than 40 JVs by PDVSA and foreign firms.

Del Pino told local media last month that power outages and limited upgrading capacity to convert Venezuela's extra-heavy oil into exportable crude has hampered production. It has forced PDVSA to import about 95 Mbbl/d of heavy naphtha and light crude to dilute its oil, Reuters trade flows data says.

These problems, occurring while oil services providers reduce operations in Venezuela, have analysts forecasting that production will not recover in the second half of the year, falling instead to its lowest level since a strike that brought output down to an average of 2.56 MMbbl/d in 2003.

Venezuela's active rig count, a good indication of future production, fell to 49 in July according to Baker Hughes, the lowest since the end of 2011.

U.S.-based oil servicing giant Schlumberger Ltd. noted a "significant reduction of operations" in Venezuela in its most recent earning release and Halliburton Co. said it is operating on fewer active rigs in Latin America, including in Venezuela. PDVSA has said there are ongoing talks to solve payment issues with many companies, including those two.

In May, energy consulting firm IPD Latin America predicted that Venezuela's crude output will average 2.35 MMbbl/d in 2016, a 400 Mbbl/d-decline from last year. Medley Global Advisors, meanwhile, expects an average decline of 250 Mbbl/d to 300 Mbbl/d, said analyst Luisa Palacios, who believes any rebound will not last.

"They achieve a temporary relief, but the declining trend continues," she said.

Inactive Rigs, Lost Equipment

The cutbacks in oil services have particularly afflicted Venezuela's second-largest producing region, Norte de Monagas, where companies have been halting operations and laying workers off, according to union representatives.

"There are many inactive rigs here in Monagas," said Luis Hernandez, a local union representative. "Some 60 workers are laid off for every halted rig. Some companies say PDVSA owes them money, there are also halted rigs due to lack of spare parts."

Being a technically challenging area, Norte de Monagas's output has declined faster than the country average in recent years, particularly affecting PDVSA's output of medium and light crudes used to dilute its extra-heavy oil and creating a growing need for imports at a time when dollars are scarce.

"Monagas' confined reservoirs need a specific pressure to properly work. If natural gas is not injected correctly, the output falls," explained a former executive of PDVSA's E&P department, who did not want to be identified.

After Venezuela in 2009 nationalized oil services firms, including Venezuelan assets owned by Williams Cos., PDVSA has faced problems maintaining output levels at areas that need secondary recovery techniques such as water, gas and vapor injections into reservoirs.

Basic maintenance goes undone at many fields, workers say. "It's painful to see how the equipment is lost deep in the weeds, including flow stations and jack pumps," the worker from the drilling company said.

The fall in output volume, coupled with the drop in global oil prices, has forced the government of President Nicolas Maduro to choose between paying external debt or supplying the dollars needed to sustain imports of basic goods.

"PDVSA, who has no money leftover at all, now needs even more investment in exploration and production [E&P] than in the previous decade to see its output to revive. At this price level, that is not going to happen," the former PDVSA executive said.