Japan's ENEOS weighs jet fuel imports, boosts output to tackle aviation fuel shortages

Japan's ENEOS Holdings is considering imports and higher production of jet fuel as part of its response to aviation fuel shortages in the country, Executive Vice President and CFO Tanaka Soichiro said Aug. 9.

As part of ENEOS' response to action plans decided at a government-led task force in July, "we will consider imports as well as production increase of jet fuel," Tanaka said in an earnings press conference in Tokyo.

"Then we will also make investments to convert our storage tanks to jet fuel as part of our mid-term response," said Tanaka, adding that the company intends to seek support from the government for this.

"We will also work on establishing our system to transport [jet fuel] from [our] refineries to airports," he said, referring to shortages of coastal vessels and personnel for refueling.

Over April-June, ENEOS reported a 2.7% year-on-year increase in its domestic jet fuel sales to 380,000 kiloliters, or 2.39 million barrels, as a result of the recovery in aviation demand following the pandemic.

Meanwhile, Cosmo Energy Holdings also intends to meet incremental jet fuel demand from foreign airlines should it receive supply orders in advance, Senior Executive Officer Tomoki Iwai told a separate earnings press conference in Tokyo on Aug. 9.

"Since we are in a short position, it would be quite difficult to respond to a prompt supply order," Iwai said. "As we intend to meet the request as much as possible, [jet fuel] imports might be increased depending on the situation."

In the event of gauging incremental jet fuel demand on top of heating demand for kerosene in winter, Cosmo Energy Holdings would consider importing the aviation fuel, Iwai said.

Cosmo Energy Holdings expects a 3.9% year-on-year increase in bonded jet fuel sales for international flights to 2 million kl in the current fiscal year to March 2025.

Middle East

Asked to comment on the fast-deteriorating Middle East situation over a possible retaliatory attack by Iran on Israel, ENEOS' Tanaka said: "We are monitoring the situations very closely."

"We are trying to diversity [our crude procurements] as much as possible," Tanaka said. "In the short term, it would be very difficult to drastically make a shift [in our crude procurements]," he said, adding that the company would have to tap oil reserves as a short-term contingency if necessary.

The Middle East's share of Japan's crude imports dipped to 96.4% in June, from 97.3% a year earlier, marking the second consecutive decrease, as the country boosted imports from Ecuador and the US, preliminary data from the Ministry of Economy, Trade and Industry showed July 31.

ENEOS also expects to start sustainable aviation fuel production of 400,000 kl or 300,000 metric tons per year based on hydroprocessed esters and fatty acids from used cooking oil, at Wakayama after January 2027, instead of 2026 as planned earlier, Tanaka said.

ENEOS Holdings said it plans to change the name of its upstream arm JX Nippon Oil & Gas Exploration to ENEOS Xplora on Jan. 1, 2025, reflecting its broader business scope, including on environmentally friendly and growth businesses centered on carbon capture and storage and carbon capture utilization and storage.