FGE's detailed assess of the mid/long-term outlook for condensates. In this study, we forecast condensate supply and demand globally, and discuss the challenges facing the market today. We look at how balances East of Suez will trends and the impact on prices.
2017 marked a watershed year for Iranian condensate. Exports climbed to 487 kb/d, the highest it had ever been, and finally, the discounts that South Pars condensate was selling at compared to Qatar DFC narrowed to just $1.8/bbl from $3.0/bbl in previous years. With Qatar’s exports facing a contraction due to its own ramp up in the Ras Laffan II splitter, Iran was set to play a dominant role in the global condensate market for years to come.
But 2018 brought with it new challenges. In March, Iran announced that they had started up their Persian Gulf Star splitter #2. Consequently, April exports plunged more than 100 kb/d to just under 250 kb/d. In May, Trump shook the oil world by announcing the US withdraw from the Iran nuclear deal effectively rolling back the landmark 2015 nuclear agreement.
As the market roiled from the implications, the South Koreans are finding themselves in the greatest quandary. Waivers look to be out of the question, judging from the firm stance echoed from every corner of the Trump administration. Full-range naphtha seems to be the most convenient short-term solution, as alternative sources of condensate are in scarce availability.
In the West, where will incremental supplies of condensates for Asia come from? Interest certainly still points to the US. However, declining condensate availability out of the Eagle Ford and the new Magellan Midstream splitter on the Gulf Coast have seen prices for Eagle Ford condensate loading at Corpus Christi soar to $7/bbl premiums against WTI. Discounts to Eagle Ford 45° API crude have also edged closer to zero. At these price levels, would it still be economic to bring US condensate to Asia?
This report will divide the condensate world into the East and the West of Suez, looking at both supply and demand. We give particular focus on the demand outlook in the Asia Pacific, and where future sources of supply will come from. Based on Asian balances, we then forecast prices of the key condensate grades marketed into the region.
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