HOUSTON/CARACAS (Reuters) - Venezuela’s crude oil production fell nearly 13 percent last year, according to figures released by OPEC on Thursday, hitting a 28-year annual low that points to a deepening economic crisis and increased chances of a debt default.

FILE PHOTO: A man walks past the corporate logo of the state oil company PDVSA at a gas station in Caracas, Venezuela December 1, 2017. REUTERS/Marco Bello/File Photo

The South American country produced 2.072 million barrels per day (bpd) in 2017 versus 2.373 million bpd the previous year, a nearly 300,000-bpd drop.

That was the biggest decline among the members of the Organization of the Petroleum Exporting Countries that have pledged to restrain production since the start of 2017 through 2018.

But unlike voluntary cuts by Saudi Arabia, Russia and others intended to stoke higher crude prices by draining a global glut, Venezuela has been unable to stop a now six-year-long production decline.

Insufficient investments, payment delays to suppliers, U.S. sanctions, and a brain drain have hammered Venezuela’s oil industry. The production fall has hit oil exports – its only major source of foreign currency to repay debt - and refining, creating intermittent fuel scarcity in the country and at some of its main allies, such as Cuba.

An alleged crackdown on oil graft in the last few months, seen by critics as an effort by President Nicolas Maduro to consolidate power, has sown panic across the energy industry and all but paralyzed state oil company PDVSA, according to people at the firm and in the sector. It is a remarkable downfall for the OPEC member home to the world’s biggest crude reserves.

“This is one of the worst collapses in history. It happened without an invasion like in Iraq, the breakup of a country like in the Soviet Union, or a civil war like in Libya,” said Francisco Monaldi, a fellow in Latin American Energy Policy from Rice University’s Baker Institute. Venezuela’s oil ministry and PDVSA [PDVSA.UL] did not respond to a request for comment.

The output drop is likely to worsen a bitter recession and hyperinflation that have poor Venezuelans skipping meals or eating from the garbage.

Opposition politicians say Venezuela’s inefficient state-led economic model and rampant corruption are to blame for the oil industry’s meltdown.

“This is the most irresponsible act against the Venezuelan people. They destroyed the industry that generates almost 96 percent of the country’s foreign revenue,” said opposition lawmaker Elias Matta.

Socialist Maduro retorts that U.S.-backed opposition supporters have sabotaged the oil sector.

HOW LOW WILL IT GO?

Venezuela’s oil gloom is set to persist this year, with the main question among analysts just how low its production will fall.

Just in December, Venezuela’s output sank by 216,000 bpd from November to 1.621 million bpd, the OPEC figures showed, a 29-percent drop from December 2016 levels.

Venezuela’s new oil czar, former housing minister General Manuel Quevedo, has vowed that output will rise to more than 2.4 million bpd this year. But Quevedo, who has no experience in the energy sector, has yet to provide a detailed plan.

January has seen an unprecedented surge in resignations, spurred by dislike of the new management and salaries that often do not allow workers to eat properly, current and former PDVSA employees say.

“They’re desperate to maintain production. Increasing it is too difficult. Internal conditions are devastating,” said one PDVSA employee, who asked to remain anonymous, referring to Quevedo’s output recovery plan.

Still, the most vulnerable oilfields have already clocked the sharpest drops, according to Monaldi, which could limit this year’s decline. He forecasts production to fall another 250,000 bpd-350,000 bpd in 2018, starting from December’s average.

Control Risks and Oxford Economics forecast a 470,000-bpd fall as PDVSA’s unexperienced management struggle to reverse low investment, cronyism, lack of payment, and equipment theft.

Oil consultancy Energy Aspects expects a drop of at least 200,000 bpd in 2018, helping to balance an oversupplied global oil market.

“Underperformance by Venezuela helps OPEC to reach its overall (production cut) target quicker for sure. Once balance is achieved, they will taper the cuts,” Amrita Sen, co-founder of Energy Aspects, told Reuters.

A further production fall could also push cash-strapped Venezuela into full default, which experts say would be one of the largest and messiest credit events in history. Maduro has said Venezuela is willing to restructure its foreign debt, including some $60 billion in bonds issued by PDVSA and the government, but the country has been late with bond payments in the last few months.

As Venezuela is still making efforts to pay, holders of some of the world’s highest yielding debt bonds have so far been tolerant of the delays, but that could change if Venezuela is perceived to no longer have enough income to pay.