Rare Indian jet cargo heads to New York

A large jet fuel cargo is heading to New York from India as refiners there navigate shrinking domestic demand as well as long-term changes in export patterns amid evolving US regulations on testing and compliance.

The Flagship Privet loaded around 470,000 bl of jet fuel at Sikka, India, on April 22 for an estimated arrival in New York on 20 May.

The last time Indian-origin jet fuel made it to New York Harbor was in November 2020, when around 50,000 bl arrived after leaving Vadinar, India, around three months prior. All Indian jet fuel – four cargoes totalling 1.92mn bl – that moved over the past three years on this route had loaded in Vadinar, Vortexa records show. The Flagship Privet was the first to load from Sikka, where Reliance operates the 1.36mn b/d export-oriented Jamnagar refining complex.

While India's domestic demand is under pressure from record cases of Covid-19 infections, ample storage capacity has allowed refiners there to keep operating at close to capacity.

The Reliance jet fuel will be arriving in New York at a time when US domestic air travel is rising as more people receive Covid-19 vaccines. US jet fuel consumption rose to 1.29mn b/d for the rolling four-week average ended 16 April, the highest level in about a year, data from the Energy Information Administration (EIA) show.

Bringing Indian jet fuel to the US sidesteps the significant cost of meeting renewable fuel blending mandates — as measured by the Argus-calculated Renewable Volume Obligation (RVO) — that is applicable to the gasoline and diesel Reliance more typically supplies to New York.

The arbitrage for importing gasoline and diesel can be significantly narrower after adding the RVO, which has averaged 16.4¢/USG, or $6.89/bl, so far this month, including some of the highest levels on record. This gives jet importers a competitive advantage.

Jet fuel is one of several ways Reliance might be diversifying its exports.

Reliance has long been a main supplier of alkylate, a gasoline blending component, to the New York Harbor region. A change in testing requirements that included the removal of aromatic testing starting this year has effectively devalued alkylate, a component previously favored for its low aromatic content. This has encouraged Reliance to ship more gasoline and other blending components to New York Harbor in addition to alkylate.

More than 1mn bl of gasoline and components have arrived in New York from India so far this month, with an additional 1.1mn bl expected in the next few days. This brings April's total to around 73,000 b/d, up from 23,000 b/d in March and the highest monthly level since August 2020.

India has also ramped up diesel exports to Latin America destinations such as Brazil and Argentina.

By Chunzi Xu