Sinopec deepens aviation fuel push with CNAF restructuring

[BEIJING] China’s Sinopec said it had completed the restructuring of China National Aviation Fuel (CNAF), the country’s dominant jet fuel distributor, according to a company statement on Friday (July 10).

Sinopec, China’s biggest refiner by capacity, said the restructuring of CNAF would strengthen China’s aviation fuel supply security and support the sector’s green and low-carbon transition.

Jet fuel is expected to become a key growth driver in China’s refined oil demand mix, the company said.

The deal creates an integrated aviation fuel business at a time when China’s aviation fuel consumption is rising, while its petrol and diesel demand is shrinking, weighed down by slowing economic growth and the rise of electric cars and trucks.

Supply risks and higher oil prices due to the Iran war have further accelerated the drop in fuel demand.

Citing S&P Global forecasts, Sinopec said China’s jet fuel consumption is projected to rise to 75 million tonnes (591 million barrels) by 2040 from 39.28 million tonnes (309 million barrels) in 2024.

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The merger will also boost the global competitiveness of China’s aviation fuel industry, Sinopec said.

“Major international aviation fuel suppliers are typically integrated oil and petrochemical companies ... while China’s jet fuel production, sales and refuelling operations have been split across different firms, limiting overall competitiveness,” the company said in the statement.

Following the restructuring, the two companies will integrate the full jet fuel value chain, including production, supply, sales and trading, helping cut transaction costs, improve service capabilities and strengthen global competitiveness, Sinopec said. REUTERS