(Adds EU and refiner comment, details, background from
* Middle East jet fuel due for tariff from Jan. 1, 2014
* Previously reported exemptions will not apply to jet fuel
* European jet fuel prices risk increasing sharply
* EU urges Gulf states to resume free trade talks
By Ron Bousso
LONDON, June 12 (Reuters) - The European Union will impose a
4.7 percent duty on jet fuel imports from the Middle East
starting next year, officials said on Wednesday, in a move that
could significantly increase costs for the EU's embattled
Last month, EU officials said jet fuel imports could dodge
the new tariff thanks to a waiver known as airworthiness
certificates or EASA Form 1 certificates.
After reviewing the system, however, the officials concluded
that jet fuel cannot benefit from the waiver, which applies
mostly to airplane parts.
The new duty comes after the European Union removed the Gulf
states from its generalised scheme of preferences (GSP), which
offers preferential trade status to developing economies,
because they are now classified as upper-middle income economies
by the World Bank.
EU officials, meanwhile, urged Gulf Cooperation Countries
(GCC) to resume bilateral free-trade talks, halted years ago,
that could lead to removing the tariff.
The tariff could have a significant impact on Europe's jet
fuel prices and on Middle East refineries, which could lose a
"There will be chaos. Europe will be stuck, they are short
on jet fuel," a senior official at a Middle East producer said.
"At the end of the day, the consumer will have to pay for
this. There is no way we will," he added.
IMPORTS A THIRD
European demand for jet fuel amounted to 1.2 million barrels
per day (bpd) in 2012, of which one third was imported, most of
that from the Middle East, according to the International Energy
Agency (IEA) and traders.
The 4.7 percent tariff will take effect from Jan. 1, 2014,
John Clancy, an EU trade spokesman, said.
"Being a final product, jet fuel cannot benefit from any
tariff suspension, as none of the tariff exemption regimes
applies," he said.
"In these circumstances, the GCC should reconsider engaging
again in bilateral negotiations with the EU, which have been
suspended since 2007, to return as soon as possible to a
duty-free regime in relations with the EU," Clancy said.
For Middle Eastern refiners, a decline in jet fuel exports
to Europe would lead to a bigger shift towards other markets,
the refining official said.
"Refiners in the Arab Gulf will maximise gasoil (production)
at the expense of jet. I will give a discount and go to markets
in Asia, Africa and South America," the official said.
European refiners do not have the capacity to supply all of
the region's jet fuel requirement, and Indian refiners that do
benefit from the GSP programme are unlikely to be able to make
up the difference if Middle East shipments drop off.
Jet fuel in Europe costs around $940 a tonne fob ARA.
The European Union has already said it will not impose new
duties on imports of crude oil or diesel from the Middle East or
Russia even after the review of the GSP.
Fuel oil imports will also escape the new duties, officials
said on Wednesday.
The European Union removed more than 50 countries from its
GSP scheme, which left 89 states in the programme, mostly in
Africa, Asia and Eastern Europe.
The changes will affect imports from countries including
Saudi Arabia, Kuwait, Bahrain, Qatar, Oman and the United Arab
(editing by Jane Baird)