GS Caltex is reported to have begun supplying Sustainable Aviation Fuel (SAF) to DHL Express. To this end, GS Caltex is reported to be building a dedicated co-processing production line, a method in which bio-based feedstock is fed into existing refining processes alongside conventional feedstock.
GS Caltex is reported to be installing a dedicated storage tank for bio-based feedstock and separate piping connecting it to its refining process, establishing a SAF co-processing production system using its existing refining facilities. The supply is reported to be based on Neat SAF, and is scheduled to be delivered to DHL Express over the coming year.
The supply volume is 2,000 tonnes (on a Neat SAF basis), and the dedicated co-processing production line is targeted for completion within this year, according to reports.
As carbon emission regulations in the international aviation sector tighten and pressure mounts on global logistics companies to achieve carbon neutrality targets, Korean refiners are reported to be expanding their SAF production and supply capabilities.
This supply agreement illustrates how Korea’s refining industry is moving into SAF production using co-processing methods that leverage existing refining facilities. The co-processing approach carries a lower upfront investment burden compared with building a dedicated new SAF plant, making it a strategy widely adopted by refiners both in Korea and abroad in the early stages of entering the SAF market. Global logistics companies such as DHL Express are expanding SAF procurement to meet their own carbon neutrality targets, which some observe could provide Korean refiners with a stable source of SAF demand. As the European Union’s mandatory SAF blending regulation (ReFuelEU Aviation) is phased in more strictly, Korean refiners are also interpreted as proactively building SAF production capacity to secure export competitiveness. However, as the co-processing method has limitations in feedstock supply and production ratio, it remains of interest whether a full-scale increase in SAF demand going forward will lead to investment in dedicated production facilities.
Whether the dedicated co-processing production line, targeted for completion this year, is finished as planned is a primary point to watch. Whether GS Caltex signs additional similar SAF supply agreements with other global logistics or airline companies following this contract is also worth monitoring. In addition, trends in SAF production investment among other Korean refiners, and whether the government introduces a mandatory SAF blending mandate, bear watching.