Exporters, Buyers Brace for Normal Outflow of Iranian LPG, Condensate

Exporters, Buyers Brace for Normal Outflow of Iranian LPG, Condensate
Exporters, Buyers Brace for Normal Outflow of Iranian LPG, Condensate

Iranian exporters aim to increase LPG exports to full capacity, if the US administration lifts sanctions that limited shipments from the country's petrochemical plants and gas refineries, adding to healthy Middle East supply, industry sources familiar with the sector said.
Assuming the US completely removes sanctions in second half of 2021, Iran can export 3.73 million tons during the period and at least 33 vessels will be needed for transportation, six more than currently, they said, S&P Global reported.
Removal of sanctions, should the US reenter the Joint Comprehensive Plan of Action after former US the twice-impeached president, Donald Trump, withdrew in May 2018, could also allow Iran to export condensates, an ultra-light crude that yields better product margins and put pressure on Asia's naphtha market.
South Pars condensate is expected to be competitively priced, allowing petrochemical makers to obtain cheaper feedstock naphtha from cracking this condensate.
"The market is worried the lifting of Iran sanctions would weigh on the naphtha market because condensate will be cheaper, so the Korean splitters will buy more condensate again instead of heavy full range naphtha," a petrochemical producer said.
Iran had previously exported condensates to South Korean end-users, where splitters switch between using condensate and various naphtha grades, depending on economics. 
If Iranian supply were to return to the market, it would impact other types of naphtha, sources said.
"Once Iran and the US come to an agreement, Iran can export oil products again, and it will definitely affect the naphtha market," a Singapore-based source said.
"Last time, Iran used to export a lot of condensates for splitters like Hyundai, Hanwha and others in Korea, and if this were to resume, then demand for heavy paraffinic naphtha will definitely go down," the source added.
Restored Iranian LPG exports would add to abundant Middle East supply this year, with major producers regularly accepting lifters' monthly term nominations without cuts or delays, while Kuwait and Qatar consistently sell spot cargoes. 
Whenever the US arbitrage window opens, ample supply in Asia would render LPG cheaper than naphtha, making propane and butane a favored cracker feedstock.
LPG from petrochemical plants are produced by Bandar Imam Petrochemical Company in Khuzestan Province.

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