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Chen Aizhu
Singapore: China is likely to cut its jet fuel imports in 1999 due to adequate domestic supply, official and industry sources said last week.
"The guideline has not changed, maximize domestic supply to meet jet fuel demand," said an official with the State Petroleum and Chemical Bureau (SPCB), the industry's macro policy maker which reports to the State Economic and Trade Commission (SETC).
The official said that import quota for 1999, which is still being reviewed, is likely to be less than the previous year's 1.29 million tonnes.
But China Aviation Oil Supply Corp (CAOSC) is lobbying the government to keep its import quota unchanged so as to take advantage of the cheap international market, industry sources said.
CAOSC, a Beijing-based state-owned company, is the sole buyer of jet fuel in China as it represents the country's only civil jet fuel consumer Civil Aviation Administration of China (CAAC).
"We hope that we can secure one third of the demand from the international market," said a CAOSCofficial.
Another senior CAOSC official told Reuters the domestic jet fuel market was confronted with key problems such as prices not being market-driven and suppliers and buyers not binded by contracts.
This has made domestic supply not as reliable as imports, he said.
China bought a total of 1.29 million tonnes of jet fuel from the international market in 1998, received at CAOSC's terminals at Qinghuadao (Hebei province), Shanghai, and Huangpu and Zhanjiang in Guangdong province.
The figure was down 9.3 per cent from 1.38 million tonnes in 1997, according to Chinese customs data.
Civil jet fuel consumption in 1998 totalled 3.92 million tonnes.
China's jet fuel production rose by 3.8 per cent in 1998 to reach 4.9 million tonnes, making it the only oil product to register growth, according to official statistics.
The growth was prompted by an attractive government-regulated price of 2,000 yuan per tonne ($30.19 per barrel), compared to current spot price of about $14 per barrel on afree-on-board Singapore basis.
"Jet has been one of our most profitable products. We will definitely produce more this year," said an official with Zhenhai Refining and Chemical Co Ltd, which has been supplying jet to the Shanghai airport.
Zhenhai turned out 540,000 tonnes of jet fuel in 1998 and is expected to produce around 650,000 tonnes this year, he said.
China's civil jet fuel consumption has posted a robust two digit growth since 1990, with the period between 1990 and 1996 riding on an annual increase as high as 19.7 percent, said the senior CAOSC official.
Jet fuel imports started at 500 tonnes in 1990 and picked up most dramatically since 1995 when it hit 761,000 tonnes and almost doubled to 1.38 million tonnes in 1997, customs figures showed.
China's total notional 1998 jet fuel consumption, a figure derived from national production plus import minus export, was at 5.27 million tonnes, official statistic showed.Apart from consumption by civil aircraft, the remaining 1.35 million tonnes wasbelieved to have been consumed by the military. Meanwhile, Indonesian state oil giant Pertamina on Friday increased its prices for jet kerosene and aviation gasoline, with immediate effect. The price of aviation gasoline was increased to 1,700 rupiah a litre from 600 rupiah a litre and jet kerosene to 1,060 rupiah a litre from 600 rupiah, spokesman Toto Suparto told Reuters.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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