Rajan Vig
CEO and Founder
Indimex Group
View from the Top

Importing Fuel to Provide Consumer Choice

Tue, 01/21/2020 - 20:12

Q: What opportunities did Indimex identify in Mexico prior to entering the country?

A: Mexico is sixth- and ninth-largest consumer of diesel and gasoline, respectively, in the world. It has a population of over 130 million but suffers from a lack of refined products, importing over 70 percent of its refined petroleum. The US Gulf Coast produces some 65 percent of refined products in the US and is the most efficient refining hub in the world. The opportunity that Mexico provides was obvious to us. With Peña Nieto institutionalizing the Energy Reform and bringing it to fruition, the choice became simple.

Q: What is the unique business model that Indimex group employs?

A: Very few companies are commercializing products direct from the US into Mexico and developing a secondary market. Indimex offers consumers who would usually buy from PEMEX the opportunity to access fuel at a potentially cheaper cost and more efficient logistics. What makes us unique is our understanding of the US market and the representation, including an office in the north of the border. The company’s experience and network in Houston, a city essential to the refined products market of Mexico’s three main cities, is tantamount to our business model. Few companies in Mexico have this exposure to both sides of the border and what is perhaps more important, the understanding of how business is done here.

Q: Which major blends does Indimex deal in?

A: We market gasolines, including blended and standard Octane 87 and 92, which are the two main octane grades in Mexico. The company is looking at the jet fuel market because it has access to turbosina. There are four or five global majors that service airports, so the primary market is tough, but we have begun to develop relationships with the smaller and private airports for aviation gas, which is a higher octane. The company also markets kerosene, which is preferred during the winter months in the north of the US. We deal with end consumers, such as trash companies and mining companies, as well as distributors, such as those who have often worked with PEMEX in the past and are now moving into private products.

Q: What is Indimex’s hedging strategy?

A: Most products are referenced off the Platts Price Index and we have many clients who want to fix their pricing to Mexico. Indimex’s focus for the next year is developing a private market in Mexico by bringing the product in and selling from our facilities at a posted price per day. Our hedging strategy is to hedge on behalf of our customers for FX because of the fluctuation between the peso and the dollar. We hedge against the Platts Price to fix the price of the molecule, whether diesel or gasoline. But there are different ways to hedge, including fixing a price or engaging in a spread project. The goal for Indimex is to provide our customers with consistency. Mexico faces two main challenges in pricing. One is that pricing is affected by the suspicious mixing of fuels. The second is the difficulty resulting from price gauging because of the discrepancy between the Tar price and the IEPS, which moves every week. This produces an unpredictable situation where the correlation between the IEPS and the Platts price does not always exist in practice. If Indimex can initially match the product prices of the market then we add value through an improved logistics service, the guarantee of supply and the transparency we offer.

Q: How does Indimex guarantee the security of the products it markets, given the transport concerns in parts of Mexico?

A: There are different ways of estimating risks, but they cannot be translated into a financial model because the risk varies by region. Indimex imports product into Mexico via rail and truck. Rail is safe until it reaches the transiting terminal and the “last mile,” where product is transferred onto trucks and delivered direct to the end consumer. We have never had a compromised or lost product because we associate with local trucking companies that know the routes. Understanding the lay of the land and having links to local groups is key to reducing exposure.


Indimex Group trades and markets crude and refined petroleum products from the US into Mexico. The company, which has a presence on both sides of the border, distributes its products via an extended and efficient logistics network.