1 million bpd, or 70 percent of total production, but began declining at an 11 percent rate annually beginning in 2004 and at a much faster rate over the past two years.

Reyes Heroles said Cantarell's output is expected to eventually stabilize at between 400,000 and 500,000 bpd and at that level will account for 20 percent or less of Mexico's total oil production.

President Felipe Calderon last year sought to push a controversial plan through Congress to overhaul Pemex, including allowing the cash-strapped company to take on private oil firms as full partners in the exploration and drilling of new deepwater deposits in the Gulf of Mexico.

But leftist lawmakers fiercely opposed the initial bill, claiming that the aim of the government was to privatize Pemex, created after President Lazaro Cardenas' nationalization of the oil industry in 1938.

After months of debate, a revised bill was passed that gives Pemex more freedom to undertake projects with private firms, but excludes the provisions of Calderon's original initiative that would have allowed them a stake in the oil or any eventual profits.

Calderon told an oil congress this summer that the recent decline in Pemex's output and the strides made by its counterparts in other parts of the world have left the state oil company in a position of relative backwardness.