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Asian sweet crude prices strengthen as condensate supplies fall
August 29, 2013 / 9:23 AM / 4 years ago

Asian sweet crude prices strengthen as condensate supplies fall

* Qatar, Australia gas plant maintenance tighten condensate supply

* Thailand import demand rises on gas plant outage

* Pertamina seeking condensate for oil-petchem plant restart

By Florence Tan

SINGAPORE, Aug 29 (Reuters) - Asian sweet crude premiums have surged to multi-month highs as condensate supplies have tightened amid new light fuel demand, crimping a market already hit by output cuts in Libya and restricted arbitrage flows from the Atlantic Basin.

Gas field maintenances in Qatar and Australia have reduced shipments of condensate, a light oil whose prices often move in tandem with Asia’s sweet crudes. And this comes just as refiners are stocking up for the peak winter season and new condensate needs arise in China, Indonesia and Thailand.

Overall availability of condensate - used for blending with heavier crude and also processed into naphtha to make petrochemicals - has fallen at least a quarter in October.

A Singapore-based trader said there were limited volumes of condensate, adding that this had particularly hit buyers in Thailand because of an outage at a gas separation plant there.

“The Thais seem to be a little more hungry than usual as their gas separation plant is down and suddenly they have to buy some light feed,” the trader said.

Supply may tighten further in November as Indonesia’s Pertamina prepares to restart a petrochemical plant that has been idled for more than a year, while Dragon Aromatics, one of China’s largest petrochemical producers, ramps up operation at a new condensate splitter.

Condensate differentials for October have surged to the highest this year, while Malaysian sweet crudes Labuan, Tapis and Kikeh were sold for loading dates in that month at the strongest premiums in more than a year.

The price gains are raising costs for refiners and eating into the profit from processing a barrel of crude into fuels, and there seems to be little chance for relief on the horizon.

Unrest in Libya has caused output there to dwindle to 250,000 barrels per day (bpd) from pre-civil war levels of around 1.6 million bpd, making this the worst disruption since the ouster of Muammar Gaddafi in 2011.

“Everyone is praying that it will come back but you don’t know. The market is in a panic especially for refiners,” a Singapore crude trader said.

High Brent prices since July have also curbed export of sweet crude and condensate from the Atlantic Basin to Asia, with September shipments of West African crude set to slide to their lowest in nearly two years.

Brent’s premium to Dubai crude has jumped to its highest in nearly two years with the European oil marker holding near 6-month highs boosted by jitters over Syria.

A wider spread makes Dubai-linked grades more attractive than those priced on Brent, and discourages the flow of Brent-linked crude from the Atlantic Basin to Asia.

CONDENSATE

Spot differentials for Qatari grades such as deodorized field condensate (DFC) and low sulphur condensate (LSC), and North West Shelf (NWS) and Bayu Undan condensate in the Pacific have all gained $1-$2 a barrel from September loadings because of gas field maintenance.

There was one less cargo each of North West Shelf (NWS) and Bayu Undan condensate in October compared with the previous month.

The four NWS condensate cargoes for October were quickly snapped up by ExxonMobil Corp and Samsung Total Petrochemicals at $3.50-$4 a barrel below dated Brent, about $1 narrower in discount than in September.

Qatar’s Tasweeq didn’t award any DFC cargoes in its monthly condensate tender for October, even though bids rose to premiums of more than $3 a barrel, and it was not immediately clear how many Qatari condensate cargoes will be available.

Tasweeq typically sells five spot DFC cargoes each month. The company didn’t immediately respond to queries.

Prior to the tender, October DFC traded at close to $3 a barrel above Dubai quotes, up from premiums of just above $2 for September, traders said.

In addition, Thailand’s national oil company PTT Pcl snapped up an October cargo each of Yetagun and Muda condensate from Malaysia’s Petronas.

PTT also bought the only October Bayu Undan condensate cargo from ConocoPhillips.

Repairs at PTT’s No. 5 gas separation plant could take three to five months after a thunderstorm and lightning strike damaged its waste heat recovery unit, the company said. (Additional reporting by Manash Goswami; Editing by Tom Hogue)

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