FGE’s detailed assessment of the mid- to long-term outlook for condensates provides comprehensive coverage of the key challenges facing the market today. In this study, we forecast condensate supply and demand globally using bottom-up modelling to explore trends in condensate trade and pricing from now until 2040.
2022 was an eventful year for the oil and gas market.
The Russia-Ukraine war brought volatility and uncertainty to the market. EU and G7 sanctions led to big changes in seaborne global trade flows of crude and refined products.
COVID-19 lockdowns and restrictions in China dampened demand for various petrochemicals, including PX. At the same time, tightness in octane balances lifted the global aromatics complex. This ultimately provided some relief from the poor petrochemical margins condensate splitters were experiencing.
Notably, there was some anticipation of the return of Iranian South Pars condensate to the open market. Iran and the US were close to reaching a new nuclear deal in 3Q 2022, but negotiations eventually broke down. The Iranian government’s crackdowns on subsequent protests set relations between the two countries back further, making any swift end to sanctions unlikely. However, the planned restoration of diplomatic ties between Saudi Arabia and Iran, announced in March 2023, is seen as a hopeful sign for trade.
There were some new entrants to the seaborne condensate market in 2022. For example, Med-focused independent Energean produced first gas at Israel’s offshore Karish field in October 2022, with the field’s first condensate export cargo loaded in February 2023. Meanwhile, the Eni-operated Coral FLNG offshore Mozambique exported its first condensate cargo in November 2022.
In 2023, the market will be dealing with heavy condensate splitter outages while also keeping a close eye on downstream petrochemical demand. China’s economic growth will take front and centre stage and ultimately set the tone for condensate splitter margins.
In the next decade, we expect market uncertainty to increase. On the supply side, Iran’s condensate surplus could dwindle with new projects on the horizon. In contrast, Qatar’s North Field project will massively expand Qatar’s condensate exports.
There remain assets with significant condensate export potential in countries such as South Africa, Vietnam and Russia that could emerge in the coming years.
On the demand side, while we could see one or two merchant splitter condensate projects materialise by 2030, there are many other factors to consider. Dynamic shifts in the naphtha and petrochemical markets as well as the overall refining complex will set the tone for condensate markets in the long run.