Hengli wants to become China's leading private jet fuel exporter

* Hengli applied for fuel certification from aviation authorities

* Also applied for 3 million tons of jet fuel export quotas

* Requires separate licenses for domestic jet fuel distribution

By Chen Aizhu

SINGAPORE, May 28 (Reuters) – Hengli Petrochemical wants to be the first private jet fuel exporter in China, said a spokeswoman for Hengli and other company sources, but the steps to take to get the license and the difficult approvals by.

Hengli, initially a petrochemicals manufacturer, is in the process of ramping up a 400,000-barrel-a-day (bar / d) oil refinery in the port city of Dalian after commissioning in December.

It plans to produce 5 million tons of refined products (about 40 million barrels) by the end of the year, including up to 3 million tons of aviation fuel. , said two sources of the company, attacking the fuel for which growth in demand is the fastest.

However, Hengli must first have his jet fuel certified by the aviation authorities and then obtain export quotas before shipping supplies overseas. Without these authorizations, unless he can obtain the right to sell aviation fuel on the domestic market, he would be forced to adjust his production to produce more diesel at the price of the higher value product.

"The company hopes to obtain export quotas (…) but we are planning obstacles to obtain national licenses," said a Hengli source.

A leader of another Shandong-based private refinery, a hub for small independent operators, said: "Few independent plants produce jet fuel because it is a monopolized market and needs difficult certifications. to obtain."

The new Hengli plant and a similarly sized private refinery that Zhejiang Petrochemical began testing this month add to China's rising fuel surplus, as the country's refinery throughput surpbades demand growth.

To find a profitable market, Hengli has asked for 3 million tonnes of export quotas for its jet fuel production this year, a spokesman for Hengli said, without giving a deadline for obtaining authorizations.

The Ministry of Commerce and the National Development and Reform Commission, which are jointly responsible for the allocation of export quotas, have not responded to requests for comments.

Obtaining these quotas would make Hengli China the first private refiner to export aviation fuel, but before reaching this stage, it must first obtain airworthiness certification of its fuel from CAAC (Civil Aviation). Aviation Administration).

Hengli has already filed a certification application with CAAC and hopes to obtain it in July, when refinery production will have stabilized, the company spokesman said.

A spokeswoman for CAAC confirmed that the CAAC had received Hengli's request, but had given no information regarding its approval or timing.

Earlier this month, China released its second batch of fuel export quotas for 2019, all destined for state – managed refiners, thus extending the policy banning the self – employed. export fuel.

COLD DOMESTIC RECEPTION

Hengli also needs a license from the country's Aviation Fuel Certification Committee, which oversees the production and distribution of jet fuel.

"We contacted the committee on a number of occasions, but we never had a clear reaction as to what happened to our case. It seems that the agency is extremely cautious in granting a license to a private company, "said a company source.

The main office of the Beijing Fuels Agency is located at the headquarters of China Petrochemical Corp., the parent company of Sinopec Corp., the largest refiner in the country. The committee is made up of members of China's aerospace industry and state-owned oil companies, including Sinopec.

A Sinopec official who sits on the fuel committee confirmed that Hengli had investigated the national license application, but said the committee had not yet defined a procedure for private producers and that it did not Previously occupied only state-run refineries.

"In an overcrowded kerosene market, we should try to prevent the risks by reinforcing the rigor with new suppliers, because it is to provide aircraft," said the official, who refused to give his name to reporter because he is not allowed to talk to the media.

Sinopec refused to comment.

Without export documents and permission to sell jet fuel on the domestic market, Hengli would choose to produce more diesel or fuel blending components at the expense of jet fuel, the company said.

"We could easily switch to manufacturing more diesel or similar products for sale in the domestic market," said senior source Hengli.

If Hengli were successful in penetrating the jet fuel market, both internationally and domestically, other private refiners would likely follow suit.

Zhejiang Petrochemical would also be interested in export quotas and licenses, said a company executive who asked not to be named. The calls on Zhejiang Petrochemical remained unanswered. Hengli's sources refused to be named because they are not allowed to talk to the media.

(1 ton of refined petroleum products corresponds to about 8 barrels)