By Alexandra Alper and David Alire Garcia

MEXICO CITY, Dec 8 (Reuters) - Mexican Senate committees on

Sunday debated an energy bill that would open up the world's

10th-biggest oil producer to private investment by allowing new

types of contracts, marking the industry's most dramatic

overhaul in 75 years.

The bill, announced by centrist ruling party and opposition

conservative lawmakers on Saturday, would let private firms

partner with ailing state oil firm Pemex via

profit-sharing, risk-sharing and service contracts as well as

licenses in a bid to boost sagging production.

The reform, which would keep ownership of crude in state

hands, is at the center of an economic reform drive that

President Enrique Pena Nieto hopes will boost lagging growth in

Latin America's No. 2 economy.

It is much bolder than a draft proposed by Pena Nieto's

Institutional Revolutionary Party (PRI) in August, which would

have offered profit-sharing contracts and was considered too

tame for attracting private firms.

Senate committee lawmakers debated the bill on Sunday, but

did not wrap up speeches in time for a vote. They will resume

their session on Monday. Once they sign off on the bill, it

heads separately to the full Senate and lower chamber for votes.

Pena Nieto hopes to pass the reform before Christmas but

lacks a majority in Congress. He needs the support of

conservatives to push the bill through after the leftist Party

of the Democratic Revolution (PRD), which opposes opening the

oil sector, pulled out of talks.

PRD members on Sunday called the bill "national treason"

while centrist ruling Institutional Revolutionary Party (PRI)

lawmakers and conservative opposition figures sang its praises.

"Today we have bet that we can imagine a Pemex that can go

out and compete in the world," said PRI Senator David Penchyna,

who heads the energy committee.

Saturday's proposal would allow private investors to drill

for and market the country's oil.

"I feel very optimistic about this," said Luis Miguel

Labardini, a partner at Mexico City-based energy consultancy

Marcos y Asociados, who said that the production-sharing

contracts are "very important" for Mexico's vast deepwater oil

reserves.

"It seems that the original PRI initiative from Pena Nieto

wasn't written in stone, and that Pena Nieto was able to take

into consideration the reaction of the industry."

The reform, however, stops short of full-blown concessions

that oil majors had been hoping for and does not allow companies

to book reserves. It does let them report projected income from

agreed contracts for accounting purposes.

"Bottom line is that if implemented this should boost

(foreign direct investment) and oil output over the (medium

term)," David Rees, an economist with Capital Economics, said in

an email.

The draft marks a major break with tradition in Mexico,

where assets of foreign oil companies were expropriated in 1938

to create Pemex, which is a symbol of national pride.

Outside the Senate, hundreds of protesters beat rocks and

spoons against barricades covered with graffiti assailing the

energy reform, as riot police looked on.

"What are all the police doing?" asks a small child in one

street art drawing. "Protecting thieves," a mother figure

replies.