Mexican authorities said they expect average daily crude output to fall in 2010 to 2.5 million barrels per day, which would represent a four percent drop compared with the first half of this year and a decline of 14 percent since 2008.

Mexican Energy Secretary Georgina Kessel and the head of state oil company Petrolos Mexicanos, or Pemex, Jesus Reyes Heroles, gave the same output estimate for 2010 in separate statements.

Both officials said the decline was due primarily to the steady depletion of the offshore Cantarell field, once Mexico's largest.

'We're seeing a significant decrease in ... Cantarell, and so for the coming year we're estimating that we're not going to be able to recover the levels of production we previously had,' Kessel said.

Kessel recalled that the energy ministry had forecast a sharp drop in production due to Cantarell's decline and predicted a gradual recovery over the next five years until a level of 3 million bpd is attained in 2015.

Nevertheless, she said 'at this time we're reviewing our figures and you'll know our forecast around the end of the year.'

For his part, Reyes Heroles said the country's oil output thus far this year has been 2.6 million barrels per day and that production next year is expected to fall to 2.5 million bpd.

The Pemex director noted that Cantarell used to account for 2.1 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.

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