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Angolaplans to increase its oil production by 20 percent by next year after suffering a "very difficult" 2014 as costs soared, prices slumped and technical problems hit output, the state oil company Sonangol said.

Oil output from Africa's second largest exporter and a supplier to China averaged 1.67 million barrels per day (bpd) last year, down 2.6 percent on 2013, Sonangol said in its annual results presentation on Wednesday.

Gas output fell 29 percent after its liquefied natural gas (LNG) plant was hit by mechanical problems, helping reduce Sonangol's net income to $710 million last year, down 77 percent from 2013.

Sonangol plans to restart LNG exports by the end of this year and boost oil production to 2 million bpd by the first quarter of 2016, an ambitious plan in a year when it will slash $4 billion of costs due to lower oil and gas prices.

The OPEC-member has missed its oil production target of 2 million bpd for several years due to project delays and disappointing levels of investment as oil majors scaled back exploration projects due to the global economic downturn.

"2014 was a very difficult year," Sonangol CEO Francisco de Lemos Maria told reporters in Luanda. "We need to make corrections and to re-evaluate our entire implementation strategy," he added.

Sonangol has secured the promise of a $2 billion loan from China to help with oil projects this year.

Angolasends about half of its oil to China and Sonangol has a joint venture with Sinopec, China's second biggest energy company.

Oil accounts for around half of Angola's GDP, 80 percent of tax revenues and 90 percent of export earnings.

Beijinghas issued several oil-backed loans to Angola dating back to 2003, a year after the African nation emerged from a 27-year civil war.

Prior to this loan, China had lent Angola $14.5 billion since the war's end. Angola is seeking to borrow a total of $10 billion abroad this year, including issuing a debut $1.5 billion Eurobond and tapping the World Bank for $1 billion.

Parliament on Wednesday passed a revised 5.4 trillion kwanza ($51 billion) 2015 budget, cutting spending by 1.8 trillion kwanza from its original plans due to a drop in oil prices.

Angola's kwanza has weakened more than 7 percent in the last five months as oil prices weakened and foreign exchange supplies tightened.