China Aviation Oil looks to trade other products, expand abroad
* Wants to reduce dependence on jet fuel trading
* First trading office in Europe likely by Q4, 2013
* Also studying Australia and Middle East for opportunities
By Jessica Jaganathan
SINGAPORE, Sept 17 (Reuters) - China Aviation Oil (Singapore), Asia's top jet fuel buyer, plans to move into other oil products to limit its dependence on aviation fuel as growth in top consumer China slows, a senior company executive said on Tuesday.
CAO is the sole jet fuel importer into China and its top customers include the nation's three biggest international airports.
It wants to continue to focus on its core business of jet fuel trading, but is trying to limit its dependence on the aviation fuel by expanding into other oil products such as fuel oil, gasoil and petrochemicals, Head of Business Development Han Jing Xieng said.
"We hope to be a global transportation fuels provider, not only in Asia-Pacific... but also in Europe, North America, Middle East and Australia," she said in a presentation to investors and journalists.
CAO hopes to achieve about a third of its overall gross profits from other oil products in 2020, up from just 2 percent currently. Profits from jet fuel, on the other hand, will likely be down to 36 percent from the current 48 percent.
The company is expecting jet fuel consumption growth in China to slip to 9 percent from 2016 to 2020, from 11 percent from 2011 to 2015, which will likely keep jet fuel import growth rates at almost zero, CAO Chief Executive Meng Fanqiu said.
This is partly due to refinery capacity additions happening in the country, which will increase jet fuel supply and reduce its dependence on imports, he added.
TO EXPAND GLOBALLY
CAO wants to focus on building a global trading network by setting up its first European trading office most likely in London in the fourth quarter of the year and to start operations by next year, Han said.
The company is also looking to set up a trading arm in North America where it already has a subsidiary which supplies jet fuel to airports for its Chinese airline customers.
It will also study the Australian market to identify growth opportunities as the country's imports of oil products increase with the closure of ageing refineries, Han added.
In the Middle East, CAO will look to secure term supplies of oil products due to increasing refinery capacity additions expected in the region over the next five years.
CAO is 51 percent owned by China National Aviation Fuel Group Corp and 20 percent by BP Investments Asia, a subsidiary of oil major BP Plc.
Apart from trading in jet fuel and other oil products, the rest of CAO's income is expected to come from asset investments, including minority stake in refineries, production facilities, ownership in storage terminals, marine facilities and transportation, Han added. (Editing by James Jukwey)
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