UPDATE 2-Mexico's Cantarell oil field may be stablizing

* Oil production falls in August but Cantarell slide stops

* Pemex cautious on stabilization at Cantarell

* Chicontepec output down, overall production falls 7.9 pct (Recasts, adds August monthly data, detail, byline)

By Robert Campbell

MEXICO CITY, Sept 25 (Reuters) - Mexican oil production fell again in August but state oil company Pemex said it had some early indications the rapid fall in output at its giant Cantarell field may be slowing.

Mexico pumped 2.542 million bpd in August, a decline of 7.9 percent on a year ago but production at Cantarell edged higher for the first time in more than two years.

A slowdown in the decline at Cantarell would be welcome news for Mexico, which faces a possible downgrade of its credit rating amid concerns the government is overly dependent on revenues from the declining oil industry.

However, a Pemex spokesman urged caution, saying the company needed more time before it could be sure that the field had stabilized.

"There are some indications of stabilization but it is early. It is difficult to determine a stable trend and we don't want to get ahead of ourselves," said Pemex's Carlos Ramirez in an email.

The Cantarell unit, which includes the giant field along with several nearby satellite reservoirs, produced 650,154 bpd in August, up from 646,557 bpd in July, according to the energy ministry. Output at Cantarell was 34 percent below what it yielded in August 2008.

Mexican President Felipe Calderon fired Pemex's chief executive earlier this month in part due to frustration over the company's repeated failure to meet production goals.

The government abandoned its forecast that oil production would rise to 3 million bpd by 2012 earlier this month, projecting in its budget proposal that output would fall to 2.5 million bpd in 2010 and remain at that level for several years.

A legacy of years of underinvestment in exploration means Pemex has few options to quickly replace the production capacity lost at Cantarell. The company is stepping up its search for new fields in the deeper waters of the Gulf of Mexico but any finds there will take years to develop.

CHICONTEPEC SLIPS

In the medium term Pemex is focusing on developing the unconventional Chicontepec reserve, a huge onshore area where billions of barrels of crude are locked in complex rock formations that do not allow oil to flow easily.

However output at Chicontepec remains stagnant despite Pemex executives projections earlier this year that August would be the beginning of an upward trend in production from the area.