(MENAFN- AFP) Some of Latin America's largest oil producers are on a charm offensive to woo foreign investment, but are still keen to keep a firm government grip on the sector.
Latin America holds 20 percent of the world's oil reserves, and major producers such as Mexico, Brazil and Argentina are reaching out to foreign companies to help tap hard-to-reach crude.
Mexico has led the charge by launching a sweeping reform of its oil sector, ending state firm Pemex's 76-year monopoly.
Pemex lacks the technology to reach deep-water reserves in the Gulf of Mexico, and production has fallen from 3.4 million barrels a day in 2004 to less than 2.5 million today.
The government hopes the reform will revitalize production by attracting $50 billion in foreign investment from 2015 to 2018.
But despite the landmark overhaul, Pemex will keep a dominant role, retaining the rights to 83 percent of proven and probable reserves, an estimated 20.6 billion barrels.
And foreign firms want to know the exact terms of the contracts before bidding on the remaining fields or partnering with Pemex.
"The most important thing in this opening is whether firms will be able to purchase and extract oil with the legal certainty of non-expropriation," said Raymundo Tenorio Aguilar, director of the economics department at the Monterrey Institute of Technology.
There is also the question of taxes.
"Local taxes are very high. It remains to be seen whether this will really attract investors," he told AFP.
- Strong state role -
In Brazil, foreign companies are keen to tap the enormous "pre-salt" fields offshore, estimated at up to 35 billion barrels.
But to get in on the action they must partner with state firm Petrobras, which retains a stake of at least 30 percent in each project and a monopoly on operations.
Last November the country granted a concession for the largest field, Libra, to French firm Total, Anglo-Dutch firm Shell and two Chinese state firms - but kept 40 percent of the total for Petrobras.
Future developments could hinge on the outcome of elections in October.
President Dilma Rousseff is a proponent of a strong state grip on the energy sector.
But the Workers' Party (PT) incumbent is facing a threatening challenge from popular environmentalist Marina Silva, who polls say is on track to win in a runoff.
Despite her green credentials, if the Socialist challenger wins "it could possibly attract more private companies... (because) she may not protect Petrobras's monopoly as much," said energy analyst Adriano Pires.
But foreign firms are pinning their true hopes on Social Democrat Aecio Neves, currently running third in the polls, who has spoken out against Petrobras's mandatory 30-percent stake.
- Shadow of Repsol dispute -
In Argentina, the coveted prize is the Vaca Muerta shale oil and gas field in Patagonia, estimated to contain the equivalent of 27 billion barrels of oil.
While the project is still in the early stages, oil giants including Shell, Total, Chevron and Exxon have already signed deals with state firm YPF.
But the memory still lingers of Argentina's dispute with Spanish firm Repsol, whose stake in YPF was nationalized in 2012, sparking a bitter legal battle.
In the end, Argentina paid Repsol $5 billion in government bonds to settle the dispute and, it hopes, remove legal questions over YPF assets, enabling it to lure more foreign investment.
Like Brazil, however, Argentina keeps a firm state hand on the sector. Of the 180 wells in development at Vaca Muerta, more than 70 percent are held by YPF.
The field could enter full production in 2020, said Horacio Lazarte, energy specialist at consultancy Abeceb.
The stakes are high for the South American country, whose current proven reserves are just one-tenth of what Vaca Muerta is estimated to contain.
"Vaca Muerta is very important in strategic terms," said Lazarte.
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