Shortage of jet fuel seen on the horizon for Europe

Europe's looming jet fuel shortage [64,535 bytes]

From a position of overall market balance at present, Europe is likely to become a net importer of jet fuel soon after 2000, and even earlier if refinery closures accelerate.

If this regional shortfall occurs, it will make major disruptions likely and complicate strategic planning, given jet fuel's specialized characteristics.

The alarm over a growing jet fuel supply gap was sounded by John P. Ferriter, deputy executive director of the International Energy Agency, on the occasion of the 40th anniversary of the Central Europe Pipeline Management Agency.

Reduced flexibility

"There is, perhaps, no other major sector where fuel quality is so important," said Ferriter.

He indicated that demand for kerosine, a major blending stock for jet fuel, is expected to grow at a rate of 1.5-2%/year in Europe, while refining capacity continues to decline as refiners lack the financial resources and economic incentives to meet the new product specifications due in 2000, and again in 2005 (see related story, this page).

The availability of jet fuel will also be reduced by the larger volumes of kerosine needed for blending into diesel fuel, demand for which is growing rapidly in Europe. Meanwhile, shrinking refining capacity will further push up plant utilization rates.

Both trends will reduce refiners' flexibility to produce oil products in general and jet fuel in particular, because of its stringent specifications.

Stocks not a solution

Stockpiling jet fuel will not be an adquate means of staving off the impending crisis.

"Government oil stocks are obviously of concern to the aviation industry," said Ferriter. But IEA rules do not specify that member countries must hold specific quantities of aviation fuel within their stockholding requirements.

New sources of jet fuel supply will have to be found. These imports will have to come mainly from the Middle East, Eastern Europe, and the former Soviet Union.

Europe already imports sizeable jet fuel quantities from the Middle East, and even more so since the Asian economic crisis has greatly reduced Asian imports of jet fuel from the Middle East. But major refinery expansions planned or under way in the Middle East will boost the availability of jet fuel in the near-to-medium term.

The Middle East, however, remains a volatile and unpredictable region, warned Ferriter, implying that supply flexibility is key to solving the jet fuel problem.