19
© 2015 Platts, McGraw Hill Financial. All rights reserved. AACO – Trends in Jet Fuel Prices and Product Flows Andrew Bonnington, Editorial Director – Strategic Market Engagement
© 2015 Platts, McGraw Hill Financial. All rights reserved.
AACO – Trends in Jet Fuel Prices and Product Flows
Andrew Bonnington, Editorial Director – Strategic Market Engagement
Recent trends in global jet fuel prices
The Middle East as the primary exporter to the global market
The industry’s response to the fall in prices
New YorkDenver
WashingtonHouston
Buenos Aires
London Moscow
Dubai
Beijing
TokyoShanghai
Hong Kong
Singapore
Evergreen
Boston
HightstownPittsburgh
São Paulo
Lausanne
Platts – An introduction
Cape Town
Jet Fuel Prices Collapse
4Source: Platts
Jet Fuel refining margins under pressure
5Source: Platts
Global refining margins buoyant
6
‐6
‐4
‐2
0
2
4
6
8
10
12
$/b
Forties ARA Cracking Netback Margin Close
Urals Italy Cracking Netback Margin Close
Oman Singapore Cracking Netback Margin Close
Source: Platts
Incremental changes in Jet deficit (million mt/mo)
Source: JODI, ‘kerosenes’
‐0.3‐0.2‐0.10.0
2010
2011
2012
2013
2014
2015
p
‐0.7‐0.4‐0.1
2010
2011
2012
2013
2014
2015
p‐0.4
‐0.2
0.0
2010
2011
2012
2013
2014
2015
p
0.0
0.2
0.4
2010
2011
2012
2013
2014
2015
p
‐0.2
‐0.1
0.020
1020
1120
1220
1320
1420
15p
0.0
0.1
0.2
2010
2011
2012
2013
2014
2015
p
8Source: Market Sources
22
33
44
77
5566
8899
10
1111
11
Yanbu
Jazan
Rabigh
Duqm
SoharFujairah
Ras LaffanRas Tanura
Jubail
Al Zour
Ruwais
Refinery Owner Capacity/Expansion
Est. completion
Yanbu Aramco/Sinopec 400kbd 2014
Rabigh Aramco/ Sumitomo
Upgrade (Phase 2) 2016
Jazan Aramco 400kbd 2018
Al Zour KNPC 615kbd 2019
Jubail Aramco/ Total 400kbd 2013
Ras Tanura Aramco +400kbd on-hold
RasLaffan (2)
QP/Exxon/Total + 146kbd 2016
Fujairah IPIC 200kbp 2016
Sohar ORPIC +86kbd 2016
Duqm IPIC/OOC 250-300kbd 2018
Ruwais ADNOC +417kbd 2015
Middle East refinery expansions
1
2
3
4
5
6
7
8
9
10
11
Mid East remains key jet supplier to Europe
9
Mt / m
onth
Source: Eurostat
Average monthly jet imports/exports to EU‐28 nations (2014)
10
Algeria49,449
Barcelona
Top 2014 exporters (mt/month)
331,216 mt
318,039 mt
208,624 mt
184,529 mt
Top 2014 importers (mt/month)
626,271 mt
334,891 mt
269,279 mt
Libya10,667 Egypt
26,648
Spain(149,713)
France(334,891)
UK(626,271)
Holland(269,279)
Italy(116,820)
UAE184,529
Kuwait318,039
Lavera
Fiumicino
Morocco21,131
Saudi Arabia331,216
AG/Far East flow
USA flow43,573
Baltic flow
Source: Eurostat*EU‐28 imports from non‐EU countries
Cyprus(17,383)
Slovenia(18,900)
1,661,769 mt *
149,713 mt172,617 mt
US jet fuel exports
11Source: Platts
Jet A vs. Jet A-1: main difference on freeze point
Spec difference keeps US flow low
12
Jet A Jet A-1Freeze Point, ºC -40.0 Max -47.0 MaxFlash Point, ºC 38 Min. 38 Min.Sulphur, total, Wt. % 0.3 0.310% Distillation, ºC 205 Max. 205 Max.Final Boiling Point, ºC 300 Max 300 Max
US jet fuel exports steadily on the rise in recent years… but volumes to Europe remain fairly marginal (‘000 b/d)
68% increase
Source: US Energy Information Administration
• Many US refineries capable of producing A-1 material• Jet A does not usually contain static dissipator additive• In making A-1, a refiner will give up some of the lower end
kerosene material to the diesel pool• Shell Deer Park, ExxonMobil Baton Rouge and Lake Charles
heard to be some of the USGC jet export refineries
34,664
20,971 20,044
63,05666,900
43,573
0
20,000
40,000
60,000
80,000
2009 2010 2011 2012 2013 2014
EU28 imports of US jet fuel (mt per month)
Source: Eurostat
Tax maneuver yet to impact Russian jet flows
13Source: Eurostat
Deepening jet contango encourages storage
14
‐0.4
‐0.3
‐0.2
‐0.1
0
0.1
0.2
0.3
0.4
$/mt p
er day
Jet CIF NW ULSD 10ppm ARA
Source: Platts
Ample supply dents jet premiums
• High refinery margins led to higher domestic output
• Sustained periods of max jet mode exacerbated length
• Arbitrage re‐supply remained robust
• Seasonal lull, limited opportunistic buying sustained supply glut
• Well‐offered market prevails
15
Relative resilience of airline stock values
16
New DEFSTAN implementation varies
• Effective May 2 DEFSTAN 91‐91 increases FA threshold from 5ppm to 50 ppm
• Pipeline operators delay transition to new standard, maintain the previous requirement
• Spec misalignment creates a two‐tiered market, stagnates trading
17
FAME content: How are Europe’s pipelines responding to Amendment 3 of DefStan?
18
5,500 km running through Belgium, France, Luxembourg, Germany and the NetherlandsPipeline Length
5 ppm current cap although looking to get in line with the last DefStan amendment as quickly as possibleMaximum FAME
30 NATO depots, military and civil airfields (including Brussels, Frankfurt and Zurich), refineries, civil depots and sea portsNetwork
All member nations of the CEPS programme must approve the new cap. At present, 4 of 6 heard to have agreed to 50 ppm limit Misc.
Central European Pipeline System
CLH-PS (formerly GPSS)
Approximately 2,500 km Pipeline Length
Current status unclear. As GPSS, a 5 ppm maximum FAME content was enforced. CLH expected to be discussing currently. Maximum FAME
Heathrow and Gatwick airports, significant military airfields, and distributes about 40% of all aviation fuel within the UKNetwork
The UK Ministry of Defence sold the GPSS to CLH in March 2015 for £82 millionMisc.
2,140 km (LHP: 1,380 km; PMR: 760 km) Pipeline Length
Typical cap of 20 ppm. Flexibility of up to 40 ppm if TRAPIL notified in advance. Anything above 40 ppm will be rejected. Maximum FAME
LHP: 28 pumping stations and 27 delivery terminals. Ties into two other pipeline networks, 5 refineries and supplies 33 depotsNetwork
The LHP is Europe’s oldest and largest civilian pipeline Misc.
Operator
PMR & LHP pipelines
© 2015 Platts, McGraw Hill Financial. All rights reserved.
Andrew Bonnington
Editorial Director, Strategic Market Engagement
