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South Pars Condensate Term Allocations Steady
South Pars Condensate Term Allocations Steady

South Pars Condensate Term Allocations Steady

South Pars Condensate Term Allocations Steady

Term buyers of Iran's South Pars condensates have not received any cuts to their 2018 allocations despite the start of Phase 2 of Iran's Persian Gulf Star Refinery two weeks ago, term buyers and National Iranian Oil Company sources said on Tuesday.
Nevertheless, exports are expected to fall in the coming months, they said. Market sources at three companies who are term buyers of South Pars condensate said they have not received any notice of allocation cuts from the National Iranian Oil Company, Platts reported.
One of them added that they were in the middle of discussions with NIOC on the status of term allocations.
Nonetheless, South Pars condensate exports are widely expected to fall in the coming months, as Iran gradually moves to reserve more of its output for domestic consumption after Phase 2 of its 360,000 bpd Persian Gulf Star Refinery started operations earlier in February. S and P Global Platts earlier reported that the refinery started Phase 2 on February 14 and has begun producing Euro 5 gasoline, according to Iran's Oil Ministry's news agency, citing a refinery official.
A source at NIOC said Phase 2 of the refinery was still in its commissioning phase and was not yet running at full capacity.
"Naturally, we are going to cut because when second phase comes, we have to cut," the NIOC source said.
The refinery uses Iran's locally produced South Pars condensate as its feedstock. The completion of the second phase takes the refinery's current refining capacity up by 120,000 bpd to 240,000 bpd. Phase 3, expected to be completed in mid-2019, will add another 120,000 bpd of capacity.
"At present, we do not know of any cuts. Maybe we will hear something at the end of February," one of the term buyers, an official at a South Korean refinery, said.
South Korea's SK Energy and Hanwha Total Petrochemical as well as Japan's JXTG Nippon Oil and Energy Corp., are some of the regular term buyers of South Pars condensate, favoring the grade for its rich naphtha yield as well as its relative cheapness compared to other condensate grades.
Hanwha Total, South Korea's largest petrochemical company, currently has a term agreement to lift 105,000-130,000 bpd of South Pars condensate this year, while South Korea's Hyundai Oilbank and SK Energy are understood to be lifting around 80,000-95,000 bpd over the same period. These are around 10% lower compared with contracted term volumes for 2017.

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