Cantarell, as the oil field is known, is the world´s third biggest and responsible for about 60 percent of the 3.4 million barrels Mexico produces each day. The oil has been cheap to extract. Whereas many of the world´s important reserves are thousands of meters below ground in geologically challenging and climatically harsh environments, the deepest well at Cantarell is barely 60 meters.

"For the past generation we have been living a delicious dream," says a spokesperson at the investor relations department of Pemex, the state-owned and run oil monopoly. Unfortunately for Mexico, that dream could end with a jolt. This year, production at Cantarell will fall - Pemex says about 6 percent - for the first time since it reached an all-time high of 2 million barrels a day.

After a recent trip to Mexico, Paul Sankey, an analyst at Deutsche Bank, said: "Cantarell field provided a microcosm for the problems of global oil - peaking supply, subsidized demand growing rampantly, a history of state ownership and upcoming elections muddying the outlook for investment."

On the surface, Pemex does not seem overly worried. Last month it predicted that Cantarell´s decline would be relatively smooth, with estimated production in 2008 of 1.4 million barrels a day compared with 1.9 million a day this year. At the same time, says the company, other fields such as Ju-Maloob-Zaap and the Bermúdez complex "will compensate for the decline in production at Cantarell".

But David Shields, an expert on the nation´s oil industry, says that that relatively benign scenario is the most optimistic of Pemex´s forecasts, and is certainly not the most likely. Citing a recent Pemex study, Shields claims a much more probable outcome is that Cantarell´s treasured production "collapses" within the next three years to just one-quarter of what it is today. "The accounts that Pemex will hand over to the new government at the end of this year are not exactly what you would call stellar," he says.

So where does that leave the world´s third largest oil producer? Most analysts say the problem lies with Pemex itself, or rather with the restrictive conditions in which it has to operate. The most significant of these is that, ever since Mexico expropriated foreign companies´ operations in 1938, the constitution has barred Pemex from entering into joint-risk contracts with private operators.

To compensate for the lack of flexibility, Pemex has steadily increased its investment budget over the past decade, much of which has come from off-balance-sheet borrowing. Last year investment hit almost US$12 billion, for example, compared with less than half that six years ago.

But that sum is still considerably less than private oil companies are investing, and with the government relying so heavily on revenue from Pemex the prospects for boosting investment much more are slim. As the spokesperson from Pemex put it: "Our hands and feet are tied."

Another problem is that, even with all the money in the world, Pemex lacks the know-how to explore new fields, almost all of which are believed to lie beneath water more than 3,000 meters deep.

Pemex has tried to enlist the help of companies such as Petrobras, the Brazilian state-controlled oil company, which has both the technology and the expertise to operate in such conditions. But, as Ángel de la Vega, an oil expert at the National Autonomous University of Mexico, told the Financial Times (FT) last month, "it is not clear that Pemex can buy in the technology. Companies in this area do not accept service contracts - they want a part of the equity."

Some observers have pointed to this year´s presidential election as an opportunity to overhaul Pemex and undo the constitutional restraints binding Mexico. But none of the three leading candidates has dared to suggest constitutional change.

In an interview with the FT last month, Felipe Calderón, widely considered the most business-friendly of the candidates, hinted at liberalizing the sector. So has Roberto Madrazo, candidate for the Institutional Revolutionary Party (PRI). Both have stopped well short of constitutional change. Meanwhile, Andrés Manuel López Obrador, the leftwing candidate who currently leads the polls, has only advocated restructuring Pemex and introducing austerity.

Yet De la Vega says only constitutional change will provide Pemex with the flexibility - and private companies with the legal guarantees - needed to ensure adequate levels of investment to maintain Mexico´s reserves in the coming years. Until that happens, he says, Mexico should start getting used to the idea of becoming a net importer of oil.