Mexican state oil company Petróleos Mexicanos (Pemex) would require more government support over the coming years if it wants to increase capital expenditures (capex) without taking on more debt, even if proposed tax breaks for the firm are passed by legislators, according to Fitch Ratings.

Pemex rigs

Senator Armando Guadiana, a member of President Andrés Manuel López Obrador’s Morena coalition, has introduced a bill that would see heavily indebted Pemex’s profit-sharing duty reduced to 35% from the current effective rate of 58%.

The current rate is scheduled to decrease to 54% in 2021, which would remain the effective rate if Guadiana’s bill fails to pass, said the Fitch analyst team led by Lucas Aristizabal.

“Fitch’s base case for the company already incorporates the...