MEXICO CITY, June 3 (Reuters) - Mexico's state oil company urged lawmakers on Tuesday to approve an energy reform to spur on deepwater production after a key opposition party threatened to water down the government proposal.

Carlos Morales, head of exploration and production at oil monopoly Pemex, said that going after crude oil in the deepest parts of the Gulf of Mexico was crucial to maintaining output levels as Mexico's largest oil fields decline.

"Moving into deep waters is not something that should be a matter of choice. It is an obligation," Morales said in a televised meeting with lawmakers.

"Mexicans have to understand that the age of easy oil is over," he said. "Pemex needs the reform."

Mexico is the world's No. 6 oil producer and a key U.S. supplier, but Pemex's crude output has been dropping since 2004 as yields decline at its huge but aging Cantarell field.

President Felipe Calderon is pushing a proposal to allow more private-sector participation in the struggling oil sector, but a key opposition party said this week it would make substantial changes to the plan.

The opposition Institutional Revolutionary Party, or PRI, has criticized as "obscure" a key measure of Calderon's plan which would let Pemex sign performance-based contracts with private firms in oil exploration and production.

The government says the measure is crucial because Mexico lacks the funds and expertise to make a big push in technically challenging and costly deep-sea exploration.

Yet leftist parties accuse the government of trying to sell Pemex and have used street protests and a blockade of Congress to bog down the reform proposal.

Morales said Mexico will need to produce 500,000 barrels per day in deep waters by 2021 if it wants to maintain production, which currently averages 2.9 million bpd.

But Pemex is far off meeting that goal as it needs around 1,500 deep-sea wells to be sure of tapping oil, but is drilling only two such wells per year at present, Morales said.

Initial seismic tests have indicated the deep waters of the Gulf could hold 29.5 billion barrels of crude, Morales said.

Pemex currently pays hundreds of millions of dollars to rent sophisticated deepwater drilling platforms. (Reporting by Jason Lange, editing by Matthew Lewis)

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