Japan to Import Jet Fuel Due to High Prices

November 14, 2013

Japan’s two biggest airlines are poised to import jet fuel for the first time in at least six years as the country’s shrinking refining capacity pushes up domestic prices, Bloomberg reported on November 14.

Japan Airlines Co. (9201) and ANA Holdings Inc. (9202) may begin buying the aviation fuel from abroad starting in April for overseas flights from Tokyo’s Narita airport, according to officials at the carriers. For the first time in a decade, the companies are paying domestic refiners a premium to regional benchmark prices in long-term supply contracts.

JX Nippon Oil & Energy Corp. and Idemitsu Kosan Co. will shut refineries next year amid closures that have reduced Japan’s processing capacity by 27 percent in the past thirty years. That’s driving up the cost of domestic jet fuel and prompting airlines to look further afield for supplies.

“We are likely to begin full-scale jet imports in fiscal 2014 or after,” Kazunori Kidosaki, a Tokyo-based spokesman at Japan Airlines, said by e-mail. “We are concerned about rising prices of jet fuel from Japanese refiners because they are expected to continue cutting refining capacity.”

Narita International Airport Corp., the state-run operator of the airport known as NAA, forecasts fueling volumes to grow 2.6 percent to 4.79 million kiloliters in fiscal 2013 amid increasing traffic, according to a statement posted on its website. Volumes rose 9.8 percent in the previous fiscal year.

Copyright: Bloomberg, 2013