Jet fuel
Overview
Jet fuel market volatility, whether from crude prices, supply issues from refining capacity, or ongoing regulation changes, is a continual risk to your bottom line.
Having a choice in fuel pricing is the best way to mitigate risk and stay on top of market changes. Argus constructs price indexation in a way that is appropriate for each market. By doing so, market participants can align their day-to-day operations, improve management of fuel costs and directly impact their net earnings.
Jet fuel makes up more than 40% of an airline’s total operating expense. The rise in importance of sustainable aviation fuel (SAF) from government mandates and self-regulations from airlines has a direct implication on these operating costs.
Argus helps the jet fuel market participants to make informed decisions and optimize their strategies with price assessments and information on deals done for conventional jet fuel and SAF, as well as the latest market-moving news, in-depth analysis, supply and demand dynamics, and price forecasts.
Latest jet fuel news
Browse the latest market moving news on the global jet fuel industry.
Fulcrum Bioenergy files for Chapter 11 relief
Fulcrum Bioenergy files for Chapter 11 relief
New York, 13 September (Argus) — A US company that had set ambitious plans to convert garbage into sustainable aviation fuel (SAF) and attracted investments from major airlines and energy companies filed for Chapter 11 bankruptcy protection this week. Fulcrum Bioenergy and subsidiaries filed for relief before the US Bankruptcy Court for the District of Delaware on Monday, estimating outstanding obligations to over 200 creditors at more than $456mn. A lawyer representing Fulcrum, Robert Dehney, said at a Thursday hearing that the company was on the verge of declaring Chapter 7 bankruptcy, which typically involves liquidation of assets, before a late-breaking bid from an interested company prompted a change in plans. Fulcrum chief restructuring officer Mark Smith said in a declaration to the court that the company wants to initiate the sales process and move through the chapter 11 process on an "expeditious timeline." Judge Thomas Horan on Thursday preliminarily approved various first-day motions, including a request to continue paying Fulcrum's handful of remaining employees. Fulcrum began initial operations at its flagship Nevada facility in 2022, becoming the first company to commercialize a clean fuels pathway based on gasifying garbage and signing offtake agreements with BP, United Airlines, and others. The process at the Nevada site involved receiving and sorting landfill waste, converting that to a synthetic crude oil through a gasification process, and then sending that feedstock to a Marathon Petroleum refinery to be processed into a usable low-carbon fuel. Fulcrum eventually wanted to be able to upgrade the synthetic crude into SAF on site. An archived version of the Fulcrum website, which is no longer online, also set plans for eventual biorefineries and feedstock processing facilities in Indiana, along the US Gulf coast, and in the UK and said its suite of facilities could ultimately support 400mn USG/yr of production capacity. But Fulcrum has reported few updates on its progress more recently, and there were signs of financial struggles. Multiple contractors have filed lawsuits alleging missed payments, while UMB Bank indicated in October last year that Fulcrum had defaulted on debt obligations. The Nevada site ceased operations in May and plans for other US facilities are apparently on hold, though filings indicate that Fulcrum has not yet determined whether to begin restructuring proceedings for any subsidiaries outside the US. Fulcrum's business "represents a revolutionary idea," Smith said in his declaration, but "as with all cutting-edge businesses, the cost of innovation has been born through delays in operations and the inability to anticipate issues based on prior ventures and experiences." There were necessary equipment changes after initial operations begun, but these were expensive and affected by supply chain delays, he said. It is unclear how much feedstock was successfully delivered to Marathon, which declined to comment. The Hong Kong-based airline Cathay Pacific, which had signed an offtake agreement with Fulcrum, told Argus that it never received any SAF. Other companies that had signed offtake agreements did not immediately respond to requests for comment or declined to comment. Fulcrum had been soliciting interest from potential buyers for months and finalized an agreement with a company called Switch LTD, which agreed this month to offer a "stalking horse" bid to purchase Fulcrum's assets for $15mn and issue a loan of up to $5mn to fund Fulcrum's bankruptcy cases. A stalking horse bidding method is a way to arrive at a minimum bid price that other prospective buyers then must exceed. Filings before the court this week did not elaborate on the nature of Switch's business or its reasons for wanting to acquire Fulcrum's assets. Dehney described Switch as a "disinterested third party" and said that Fulcrum has received other interest from prospective buyers, some eyeing all of Fulcrum's assets and some just looking at physical property, intellectual property, or the UK subsidiary specifically. Failure to launch The idea of gasifying waste to produce fuel has long been attractive, since feedstock costs would be low and the Fischer-Tropsch chemical process to convert synthetic gas to liquids has been known for decades. Demand for low-carbon alternatives to jet fuel is high among major airlines, some of which have government mandates to meet or voluntary goals to rapidly scale up SAF consumption by 2030. While Fulcrum's Chapter 11 filing "was not really a surprise" given its recent financial troubles, it could give investors pause about future projects aiming to use similar technology, according to BloombergNEF renewable fuels senior associate Jade Patterson. The large majority of SAF capacity currently and the bulk of planned capacity additions through 2030 come from the more established method of hydroprocessing non-petroleum feedstocks like fats, oils, and greases, Patterson said. Efforts to build gas-to-liquids facilities, by comparison, have faced delays and financial challenges. Red Rock Biofuels had aimed for a refinery converting forest waste to begin operations in 2020 , but the company that later acquired the Oregon site at auction is now targeting a 2026 launch for its clean fuels facility. And Fulcrum's plans for converting waste into fuel go back more than a decade, having inked its first deal with a municipal solid waste supplier in 2008. Kickstarting a market for a novel fuel pathway has also not been helped by a dip over the last year for prices of US federal and state environmental credits, which function as a crucial source of revenue for biofuel producers. There is also uncertainty about how much federal subsidy certain fuels will earn when an Inflation Reduction Act tax credit for low-carbon fuels kicks off next year. But other gas-to-liquids companies are marching on — including DG Fuels, whose president told Argus last month that the company plans to reach a final investment decision by the first quarter next year on a potentially 178mn USG/yr SAF plant in Louisiana that will gasify biomass. The company has earlier-stage plans for similar facilities in Maine and Nebraska. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia's Qantas records higher fuel costs in 2023-24
Australia's Qantas records higher fuel costs in 2023-24
Singapore, 30 August (Argus) — Australian airline Qantas Airways recorded a higher fuel bill in the 2023-24 fiscal year to 30 June, as more flights, sustainable aviation fuel (SAF) expenses and carbon offset programmes weighed on costs. Qantas saw its fuel costs rise by 17pc from a year earlier to A$5.32bn ($3.62bn) in 2023-24, according to the company's full-year financial results released on 29 August. The airline group's passenger carrying capacity was up by 21pc on the previous year, with growth in domestic and international capaicty. This saw the group's overall fuel consumption grow to 29mn bl (79,000 b/d), or 18pc up on the previous year. Qantas expects fuel costs in the first half of 2024-25 to remain stable from a year earlier at about A$2.7bn, including hedging and gross carbon costs, with the group forecasting to consume 15.6mn bl of fuel, including SAF. Qantas forecasts domestic group capacity to rise to 104pc of pre-Covid 19 pandemic capacity in the first half of 2024-25. Its international capacity guidance, excluding Jetstar Asia, is expected to rise by about 16pc from the previous year to achieve 102pc of pre-Covid levels in the first half. The group's passenger carrying capacity, measured by available seat kilometres (ASKs), was up on a year earlier by 21pc to 141mn ASK by 2023-24, although this was still about 93pc of pre-Covid levels. Qantas has agreements to offtake SAF, renewing its agreement to buy SAF for flights out of London Heathrow and doubling the size of its corporate customer SAF programme in 2023-24. But the group saw its 2023-24 profit fall, with underlying profit before tax down by 16pc on the previous year to A$2.08bn. By Cara Wong Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
VLCC seeks diesel loading in US Gulf coast
VLCC seeks diesel loading in US Gulf coast
New York, 26 August (Argus) — A very large crude carrier (VLCC) is available to load ultra-low sulphur diesel in the US Gulf coast, with the 270,000t cargo size likely to draw cargoes away from the 38,000t medium range (MR) tanker-dominated market for US Gulf coast refined products shipments, if its owner can secure a deal. The operator of the Nissos Kea VLCC, owned by Okeanis Eco Tankers (OET), began seeking a diesel cargo in the US Gulf coast on 23 August, and the vessel remained available on Monday, according to shipbrokers. It is uncertain whether the vessel can secure a deal for a diesel voyage. Another of OET's VLCCs, the Nissos Kikouria, similarly cleaned up for a potential diesel loading from the Mideast Gulf in late July, but ended up loading a crude cargo from the region instead. The rare crossover in the US Gulf coast from the crude vessel segment comes in the wake of VLCC owners cleaning their vessels thoroughly to ship diesel cargoes into Europe around the Cape of Good Hope from the Mideast Gulf amid the ongoing Houthi rebel threat for Suez Canal transits. The Argus -assessed rate for a US Gulf coast-Europe voyage loaded onto an MR tanker stands at $31.12/t, while the rate for a VLCC carrying a typical 270,000t crude cargo to Europe from the US Gulf coast is at $11.48/t based on a lumpsum rate of $3.1mn, without considering lightering costs necessary to physically load the vessel and likely demurrage costs associated with that loading. The rate proposed for the potential diesel cargo loaded onto the Nissos Kea was at $3.95mn on Friday, according to some shipbrokers, which could reflect a premium sought by the shipowner for the atypical loading. A major US refiner considered chartering the VLCC to take diesel, the refiner confirmed to Argus today, while noting that the cost discussed for the Europe-bound voyage was well below $3.95mn. The global VLCC market has been under pressure since mid-May amid weaker crude demand in Asia-Pacific, especially in China, the world's biggest oil importer. VLCC rates from the US Gulf coast to Europe fell to $2.7mn on 13 August, down from from $4.95mn on 20 May, which could entice shipowners to consider more lucrative opportunities in the refined products market. European buyers are not the only ones in the market for large diesel cargoes loaded onto crude tankers. Petrobras shipped two diesel cargoes loaded onto Suezmax crude tankers from the Mideast Gulf to Brazil in late July. Brazilian buyers showed a propensity for larger cargoes as recently as 20 August, when Brazil's demand for long range 1 (LR1) clean tankers from the US Gulf coast boosted physical activity for the 60,000t tanker segment to its highest in 2024 for a single day. The jump in demand from Brazil for US Gulf coast-loading products comes as Russian focuses on domestic stockpiling, making US Gulf coast-loadings much more competitively priced for Brazilian buyers than during most of the period since Russia's invasion of Ukraine in February 2022. By Ross Griffith and Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Singapore's SRC partially shuts refinery for turnaround
Singapore's SRC partially shuts refinery for turnaround
Singapore, 22 August (Argus) — Singapore Refining Company (SRC) has partially shut its refinery for a scheduled maintenance in August, market participants said. SRC, a joint venture between Singapore Petroleum Company (SPC) and Chevron, has shut a crude distillation unit for a scheduled turnaround at its 290,000 b/d Jurong Island refinery. The shutdown will last about one to two months market participants said. SRC produces oil products ranging from naphtha, reformate, alkylate, gasoline, jet fuel, diesel and low-sulphur fuel oil. The cargoes are typically distributed domestically and exported to markets in Asia-Pacific, according to SRC. Some of SRC's naphtha is also sent via pipeline to Petrochemical Singapore (PCS), according to a 2023 PCS document. By Aldric Chew Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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