Mexico City, Nov 27 (IANS/EFE): State-owned oil giant Petroleos Mexicanos, or Pemex, said it found reserves of up to 500 million barrels of crude in southern Mexico, a discovery that President Felipe Calderon hailed as the "biggest find" of petroleum on land in the past decade.

The Navegante 1 field is about 20 km from Villahermosa, the capital of the southern state of Tabasco, and yielded light crude at a depth of 6,800 meters, Pemex officials told EFE.

Initial estimates are that the field contains 500 million proven, possible and probable (3P) barrels of petroleum, but new test wells are planned and could boost reserve estimates to up to 1 billion barrels, Pemex said.

Calderon, who is less than a week away from handing over power to President-elect Enrique Pena Nieto, announced the discovery during the inauguration of a cryogenic plant in Poza Rica, Veracruz, Sunday.

The oil reserves are in the Cuencas del Sureste geological formation, Pemex said.

Mexico's oil output totaled almost 3.4 million bpd in 2004, but it has since fallen due to a sharp decline in production at shallow offshore Cantarell, formerly Mexico's most productive field, and many years of insufficient investment.

The government, however, said last year that Pemex had succeeded in halting a steady annual decline in its reserves dating back to 1979.

A recent oil sector overhaul in Mexico gave the oil monopoly - created when the country's oil industry was nationalized in 1938 - more freedom to undertake projects with private firms, which are to be hired under incentive-based service contracts.

Pemex announced the discovery last month of the Supremus 1 field in the Gulf of Mexico, a find that officials said would boost Mexico's production curve to 50 years.