Mexico's proposed energy overhaul will spur private investment but leave the state as sole owner of hydrocarbon reserves, Finance Secretary Luis Videgaray said at a meeting in the Chilean capital.

Speaking on the sidelines of a gathering of Pacific Alliance finance ministers, he stressed the importance of the reform bill, which would end state-owned Petroleos Mexicanos's 75-year monopoly on oil and gas production, and sought to combat rumors about a planned privatization of the country's oil sector.

Videgaray told Efe that Brazil and Colombia were two points of reference for Mexico in the area of energy reform, saying that under "two different modalities, they achieved, firstly, an increase in foreign investment in the energy sector and, secondly, stronger state-controlled companies, as in the case of (Brazilian oil giant) Petrobras."

"Mexico is closed to investment of this type in the oil and gas sector, to investment (in which companies) assume risk; this is precisely the rationale behind the reform, to take that step to attract more capital," the finance secretary said.

Pemex, as the state oil company is known is currently permitted to work with foreign companies, but only by offering them incentive-based service contracts.

If the reform plan goes into effect, however, it would amend the constitution to allow the state-owned firm to enter into partnerships and share profits with oil majors.

It would not go as far, however, as to grant those foreign multinationals outright ownership of oil fields via concessions.

Since unveiling the overhaul initiative earlier this month, the government has touted its benefits to potential investors, explaining that it would allow them to enter into profit-sharing contracts with Pemex.

Pemex, the world's fifth-leading oil producer by output, has a monopoly on the production of hydrocarbons and refined products in Mexico.

Though production has recently stabilized at 2.5 million barrels per day and the country said last year it had achieved a reserve-replacement ratio of 100 percent, Mexico's output has suffered from the natural decline of the once-super giant Cantarell shallow offshore field and a lack of sufficient investment.

In addition to exploring deep-water areas in the Gulf of Mexico, Pemex also is looking to boost energy production by assessing its non-conventional reserves.

A senior Pemex executive said in an interview published late last month that the company needed $900 billion to develop its deep-water oil reserves in the Gulf of Mexico, estimated at 27 billion barrels.

EFE