China Aviation In Deal To Export Jet Fuel

China Aviation Oil said on Wednesday it has signed a deal with China's CNOOC to export jet fuel from the new Huizhou refinery.

The 240,000 barrels per day (bpd) plant in southern Guangdong province was launched late last month and is expected to start jet fuel production by May.

"CAO will be purchasing a substantial portion of CNOOC's total export quota of the jet fuel produced by CNOOC Huizhou refinery," a spokesperson said, adding the supplies will be for sale in the international market.

Under the agreement, which will end in December 2012, both companies will eventually sell "oil and petrochemical products in the international market", CAO's chief executive said in a statement.

CAO has occasionally exported jet fuel cargoes from China before, though the company is a dominant importer of aviation fuel for the world's third-largest oil consumer.

Jet fuel imports covered a third of the total aviation fuel consumption in China.

CAO's parent company China National Aviation Fuel Holding (CNAF) will also buy a portion of jet fuel supplies from the Huizhou plant for use by domestic airlines.

Other than importing via spot monthly tenders, CAO gets its supplies via long-term contracts from oil major BP and South Korean refiner SK Energy.

CAO's jet fuel imports for May are seen falling 13 percent from April levels to 210,000 tonnes due to a slowing global economy that has dented air travel demand and an expected rise in domestic production, traders had said.