09 May 2013 16:02 [Source: ICIS news]
BERLIN (ICIS)--Pressure on European production from "super" refineries in the Middle East and Asia will see more jet kerosene shipped to Europe instead of being produced locally, a supplier said on Thursday.
Speaking at the International Air Transport Association (IATA) Fuel Forum in Berlin, Vitol consultant Anthony Kitson-Smith said longer and more complex supply chains are inevitable as large Middle Eastern and Asian refineries have excess refining capacity and are designed to produce large quantities of jet kerosene to be shipped around the world.
Kitson-Smith said the logistics of jet fuel supply, where distribution is generally large singular points, lends itself to being shipped, as opposed to the road transport industry with numerous and wide-spread distribution.
However, the longer the supply chain, the greater the risk of contamination and specification change to jet kerosene, and Kitson-Smith warned there is not sufficient testing along the supply chain and limited testing at airports.
He said all aspects of a shipping voyage can change the specifications to jet kerosene and the increase of ship to ship transfers can limit traceability.
Fellow speaker at the seminar on refinery closures and the impact on the jet fuel supply chain, Roberto Sieber, chief economist at HETCO, agreed the changing dynamics of the jet fuel industry point to more product being moved by ship.
Sieber said there is growing demand for oil and jet fuel from Latin America and Africa, but these regions have little refining infrastructure and will add to global demand for shipped product.
He noted refining margins in Europe were still under pressure during April this year, despite numerous refineries undergoing maintenance at the same time.
Sieber also said the rise in costs of renewable identification numbers (RIN) in the US was seeing refiners lower the amount of gasoline produced and increase jet kerosene production. This would allow more product to be available from the US and possibly open new arbitrage opportunities.
The IATA Fuel Forum, which concluded Thursday, saw around 600 attendees from the airline and associated industries.
($1 = €0.76)
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