UPDATE 2-Mexico sees lower oil exports for 2008

(Recasts with detail, background)

MEXICO CITY, June 4 (Reuters) - Mexico's average oil exports will remain well below target all year, and beneath last year's levels, due to lower crude production, the head of state oil monopoly Pemex said on Wednesday.

Pemex Chief Executive Jesus Reyes Heroles said the state-run company's oil exports were headed for an average of 1.40 million to 1.45 million barrels per day over 2008, around 15 percent below a goal set in Mexico's 2008 budget of 1.683 million bpd.

The estimation is also well below an average export level of 1.686 million bpd in 2007.

The lower export outlook comes after Mexico recently admitted that crude output would average 2.9 million bpd this year, below its original target of 3.0 million bpd.

Mexico is the world's No. 6 oil producer and a key U.S. crude supplier but Pemex's oil output has declined this year due to waning yields at the aging Cantarell oil field and technical problems at wells in recent weeks.

Mexico's oil exports fell sharply to 1.439 million bpd during April, down nearly 12 percent from March levels. Exports this year through April are down 13 percent from the same period last year.

Pemex says that without legal changes to allow it to work with private partners in exploration and production, it will struggle to ramp up output. Oil reserves are also on the wane.

Mexican lawmakers are locked in a long-running debate over how best to overhaul the state-controlled oil sector, after the left-wing opposition roundly rejected a government reform proposal submitted in April.

A centrist opposition party whose vote will be crucial in getting energy laws passed has said it expects substantial changes to the law, which analysts read as meaning a watering-down of a clause to allow incentive-fee contracts with private companies.

Mexico's oil output, which has declined steadily from a peak of around 3.4 million bpd in 2004, averaged 3.082 million bpd in 2007 and proved oil and gas reserves have dwindled to around nine years' worth.

In 2004 Mexico was exporting an average of 1.870 million bpd. (Reporting by Catherine Bremer; Editing by Gary Hill)