By Phuong Nguyen and Francesco Guarascio
HANOI, March 16 (Reuters) – Vietnamese authorities have warned the country’s aviation industry to prepare for potential flight reductions from April after China and Thailand halted exports of jet fuel due to the Iran war, increasing the likelihood of shortages.
Vietnam imports more than two-thirds of its jet fuel needs, with 60% coming from China and Thailand, according to documents from the aviation regulator and importers seen by Reuters.
“There are risks of jet fuel shortages for Vietnamese airlines from the beginning of April and the following months,” the Civil Aviation Authority of Vietnam said in a March 9 document sent to the ministry in charge of transport.
It said airlines should review their plans, especially for domestic routes, and instructed airport operators to prepare additional parking space for Vietnamese carriers.
Vietnam has also seen reduced supplies from Singapore, the document showed.
In separate documents viewed by Reuters, major importers Petrolimex and Skypec said they could only guarantee jet fuel supplies for March. Skypec urged the regulator to restrict air transport to essential domestic routes if the conflict drags on.
All documents were issued after China urged its refiners not to agree to new exports early this month but preceded a hard ban on refined fuel exports from March 11. Thailand banned exports of refined oil products, including jet fuel on March 6 to all countries except Myanmar and Laos.
The regulator, the ministry and the two importers did not respond to Reuters requests for comment. Vietnam’s top airlines Vietnam Airlines and VietJet declined to comment.
DIPLOMATIC EFFORTS MADE
Vietnam was the third-largest buyer of aviation kerosene from China last year after Australia and Japan, according to Chinese customs data.
The Southeast Asian country has taken up the issue with both China, its main supplier, and Thailand.
On Sunday, Foreign Minister Le Hoai Trung asked his Chinese counterpart Wang Yi for close coordination “to ensure energy security,” in a meeting in Hanoi that had been long planned, according to the Vietnamese government’s news portal.
A Chinese foreign ministry spokesperson told reporters on Monday that Beijing stood ready to boost cooperation with Vietnam and other countries to jointly tackle energy security issues.
On Friday, Prime Minister Pham Minh Chinh asked Thailand to help address the shortage during a meeting with the Thai ambassador in Vietnam, state media reported.
The foreign ministries for Vietnam and Thailand did not immediately respond to requests for comment.
Vietnam’s aviation authority recommended that Hanoi should seek to import from other places, citing South Korea, Japan, Brunei and India as potential sources, but it also said that “in the current context it is difficult to find new suppliers.”
It added that Vietnam’s two refineries are under pressure to expand production of other oil products, making it hard for them to increase jet fuel output.
Even if supply stabilises, soaring fuel prices are disrupting the industry, it also warned, noting many routes would become unprofitable.
Petrolimex and Skypec also flagged that the spike in jet fuel prices has meant they are quickly reaching limits on credit lines and urged banks to offer more flexible financing until market conditions normalise, the documents showed.
Front-month jet fuel paper swaps in Singapore on a cost and freight basis are trading at around $157 a barrel, more than one-and-a-half times higher than pre-conflict levels, LSEG pricing data shows.
(Reporting by Phuong Nguyen and Francesco Guarascio in Hanoi; Additional reporting by Khanh Vu in Hanoi, Orathai Sriring in Bangkok, Liz Lee and Colleen Howe in Beijing and Trixie Yap in Singapore; Editing by Edwina Gibbs)
Comments