Iran looks to compensate for fall in condensate exports

Business Materials 22 September 2017 15:07 (UTC +04:00)

Tehran, Iran, September 22

By Mehdi Sepahvand –- Trend:

An expected drop in Iran’s oil condensates export is not likely to be systemic, technical or because of a major policy, but rather operational and developmental, an oil expert and former official says.

“Such reductions are common and are usually compensated in later months,” Mohammad Ali Khatibi, former Iranian representative at OPEC told Trend.

Sources on Friday said Iranian exports of ultra-light crude oil known as condensate are set to fall to a five-month low in October, with supplies to its largest buyer South Korea cut in half.

That comes after six industry sources said on Tuesday that the National Iranian Oil Company has informed buyers in Asia that it could reduce condensate exports in October due to maintenance at the South Pars gas field.

Iran plans to load about 295,000 barrels per day (bpd) of condensate for exports in October, down 31 percent from an estimated 429,000 bpd this month.

The expected drop in Iranian supplies has already boosted premiums for similar oil from Qatar to the highest in 10 months, while driving up prices for condensate produced in the Asia-Pacific such as Malaysia's Muda.

Khatibi said that he did not believe the supply cut would impact Iran’s market.

“We have our own market. But of course we have to develop the market because production is already on the rise. However, since South Korea is a good customer of ours and has a history to that effect, I do not believe any problem should ensue,” he said.

South Korean buyers SK Energy, Hyundai Oilbank and Hanwha Total Petrochemical were notified about the supply cuts early and have since found replacements, sources say.

Meanwhile, other regular buyers, the United Arab Emirates and Japan, are expected to lift about 110,000 bpd and 14,000 bpd in October respectively, steady from the previous month.

Nevertheless, China will resume Iranian condensate imports in October, after a two-month halt, loading about 17,000 bpd, the first source added.

Shipments of the ultra-light oil from Iran have eased since reaching a post-sanctions high of 601,000 bpd in February this year, more than double the level from January 2016 when Western sanctions over Tehran's nuclear program were lifted.

Khatibi, in the meantime, said he believed Iran would have to cut its condensate exports in the near future when new phases at its mega-refinery Persian Gulf Star come on stream to turn condensates to other products with added value.