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Releasing Iran's floating condensate to depress prices

Oil&Gas Materials 5 September 2015 08:00 (UTC +04:00)
An international energy company estimates that condensate prices would be pushed down by releasing a huge amount of Iran's floating condensate to markets.
Releasing Iran's floating condensate to depress prices

Baku, Azerbaijan, Sept. 4

By Dalga Khatinoglu -- Trend:

An international energy company estimates that condensate prices would be pushed down by releasing a huge amount of Iran's floating condensate to markets.

Iran's Oil Minister Bijan Namdar Zanganeh announced earlier that there are some 60 million barrels of unsold condensate, stored on water. EIA and IEA put the amount of Iran's stored oil on tankers at 30 million barrels to 35 million barrels, saying that a part of this volume is crude oil.

On July 14, the P5+1 (the five permanent members of the United Nations Security Council and Germany) and Iran announced an agreement that could result in relief from United States and European Union nuclear-related sanctions (which include some oil-related sanctions) by the end of current year.

Alan Gelder, Head of EMEARC Refining & Chemicals Research for Wood Mackenzie told Trend Sept. 4 that "condensates are similar to crude oils in that they each have their unique properties. The pricing of condensate is poorly reported, but we concur with the EIA assessment that condensate markets are currently well supplied".

"As such, if Iran were to release the condensate it has in storage into the market quickly, it could depress condensate prices further, as it would increase the competition for petrochemical feedstock, having a downward impact on refinery naphtha streams," Gelder said.

EIA released a report in mid-August saying that, Iran's floating oil is estimated to stand at 30 million barrels, more than half is condensate, and the rest is mainly medium, sour crude oil. "This estimate reflects the difficulties of finding buyers for the stored condensate, although much higher volumes may be sold should Iran provide discounts to encourage purchases."

The agency of the U.S. Federal Statistical System added that Iran may find it challenging to find buyers for the condensate, as current condensate prices indicate that consuming markets, particularly in Asia, are well supplied. "By contrast, the crude oil held in storage could be sold more quickly, as price differences currently indicate more demand for medium sour crude compared to lighter, sweeter crude. There is evidence that initial volumes are already moving out of floating storage".

Edited by CN

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