A study of trends in Asian condensate trade released late last year by FACTS Global Energy, Honolulu, found that in 2010, total production of segregated field condensate reached about 2.5 million b/d, but only about 35% traded on the international market.
Condensate prices in Asia are usually linked to a marker crude oil and tend to vary in relation to that crude on the basis of the naphtha crack spread. That supply pattern, said the study, is unlikely to change much near term as new condensate splitters will absorb increases in new supplies from Qatar and Iran. The most interesting recent development, according to FGE, has been the emergence of Russian condensate on the Asian market.
Another trend the study found is that of purpose-built condensate refineries or splitters. In 2000, they accounted for 30% of traded condensate volumes in Asia, grew to 50% in 2010, and will likely account for 70% or more by 2020.
Korea and China will be the condensate drivers in the region, said the study. Based on its projections in fourth-quarter 2011, the amount of traded condensate in Asia-Pacific will rise to 1.3 million b/d by 2015 but possibly decline thereafter. FGE said that splitters will take more of the available condensate while refiners will take less.
Field condensate is produced raw from natural gas but, being liquid, trades in the crude oil market, FGE explained. Thus its supply drivers relate to gas and LNG production and development, while its demand is tied to oil and oil products and in particular to naphtha. (Field condensate will typically yield 50-60% naphtha when distilled.)
Supply
In the East-of-Suez market in 2010, total production of segregated field condensate—condensate that does not end up blended into a nearby crude stream—was in the order of 2.5 million b/d. Most of this condensate, said the FGE study, did not reach the international market.
Over the years producing countries have built their own purpose-built condensate splitters, distillation towers designed to process the particular characteristics of their condensate. Condensate splitters are to be found today in Abu Dhabi, Iran, Qatar, and Saudi Arabia in the Middle East and in Indonesia, Malaysia, Thailand, and New Zealand in Asia-Pacific.
Thus, of the total condensate produced East of Suez in 2010, only about 35%, or 900,000 b/d was traded on the international market. Those in the market for condensate in Asia could either buy the sour condensate streams out of Qatar and Iran or the sweet condensates from Australia. These three sources accounted for more than 80% of the traded condensate that was available.
This supply pattern has held for some time, said FGE. Exploitation of giant offshore North field in Qatar and South Pars in Iran began in the early 2000s and has continued. Australian condensate from the Northwest Shelf has been around longer, supplemented by some new condensate streams from the area and by additional, but short-lived, ultralight crude oil streams that have competed in the same condensate market. Meanwhile, condensate streams from Indonesia, Malaysia, and Thailand, which once traded internationally, are confined to domestic use.
This supply pattern is unlikely to change much, the study said. Both Qatar and Iran will have further condensate supply increases. But both countries—Qatar in 2016 and Iran possibly in 2017 or 2018—will have new condensate splitters to absorb these increases. Australia will also have new condensate from its Pluto, Gorgon, Wheatstone, and other LNG developmenmts. But this gas is generally dry and will not yield much condensate. Only the later development of Ichthys has significant condensate potential, said FGE.
The likely supply changes will be at the fringes, new streams that will emerge but not generally change the overall supply picture much. Future condensate production in the region will include Platong II condensate from Thailand, Bangka condensate from Indonesia, and sour Shah condensate from Abu Dhabi. Production in each case will be about 20,000-40,000 b/d.
The most interesting recent development, the study found, has been the emergence of Russian condensate on the Asian market. It doesn’t come from the Russian gas in the Far East; Sakhalin condensate gets blended into crude. But from further afield has come Russian condensate out of Western Siberia.
Last August a tanker carrying condensate left Vitino in the White Sea and traversed the Northern Sea Route, with the assistance of a nuclear icebreaker, to the Pacific and China. The trade was thought at the time to be something of a one-shot deal, a gimmick by the Russian gas producer Novatek to demonstrate the feasibility of the trading route.
No fewer than six shiploads, more than 400,000 tonnes of condensate, however, will have moved in 2011 over the same route during the July-October late summer window. Russian condensate has been seen this year as far south as Thailand. These volumes could reach 1 million tonnes/year (27,000 b/d), said FGE, if and when Russian Yamal LNG gets developed.
Demand
Condensate in Asia, like crude, said the study, will end up in a refinery. (There is no stream like Algerian, it said, which can be fed directly into the furnace of an ethylene steam cracker.) That refinery could be a conventional crude refinery, simple or complex; or a purpose-built condensate refinery or splitter.
These splitters are the coming thing, said FGE, accounting for 30% of the traded condensate in Asia in 2000, 50% in 2010, and will probably account for 70% or more by 2020.
Korea and China look to be the future condensate drivers in the region.
The main interest in splitters has been to make and guarantee a supply of naphtha for a new petrochemical project, whether it be paraffinic naphtha for an ethylene steam cracker or, more commonly, naphthenic naphtha as feed to BTX (benzene, toluene, and xylene) reformers for aromatics production. Interest here comes and goes, said the study, generally following the swings of the petrochemical cycle.
The last surge in splitter building came in 2006. Then, new splitters were completed in China, Korea, Indonesia, and Thailand. Two smaller splitters started up in Japan in 2008. But interest elsewhere had subsided by that time. One splitter project in Singapore (Concord Energy) failed, as did another in Australia (Darwin Clean Fuels). Then the financial crash of 2008 stopped other splitter projects from moving ahead.
The FGE study noted it took until 2011 for splitter interest to reemerge, on the back of robust petrochemical demand in the region. 2011 saw:
• China Petroleum & Chemicals Corp. (Sinopec) converted a distillation towers at its Tianjin refinery to run on Iranian condensate. The company contracted for 50,000 b/d of South Pars condensate in 2011. Produced naphtha is fed to the Sinopec ethylene cracker in Tianjin.
• S-Oil started a new 80,000-b/d condensate splitter in Korea at its Onsan refinery in April. Produced naphtha feeds the company’s expanding aromatics production at the site.
The Jurong aromatics project in Singapore, shelved during the recession, is now scheduled for late 2014 completion, said the study. Jurong Aromatics Corp. will include a 100,000 b/d splitter. Term commitments for the feed condensate had already been made before yearend 2011.
Further out, said FGE, is a larger 400,000 b/d splitter that PetroChina is planning to build as a source of feed for a new petrochemical complex at Taizhou in Zhejiang Province. Joint-venture partners are likely to be QPI (Qatar) and possibly Shell.
Korea and China look to be the condensate drivers in the region. Korea is already the top naphtha and condensate importer, with China a major outlet for its produced petrochemicals. China, unlike Korea, prefers to make naphtha rather than to import too much (some imports being avoidable) as feed for its own growing petrochemicals production. Buying condensate to make naphtha in a splitter—as Sinopec has done at Tianjin—may be preferred.
Changes coming?
The study said producers often worry that their condensate, a byproduct of natural gas, will be hard to sell. The pool of customers can be small. Conventional refineries often have little interest in buying it, particularly if they operate expensive upgrading equipment that goes to waste when condensate is the feed.
For this reason producers may build splitters as a defensive measure to take condensate off the market, and substitute condensate with more acceptable naphtha and gas oil export sales instead.
But as new condensate splitters are built at the consuming end, said FGE, this will tend to lock in more of their condensate export sales. Not all condensate splitters are guaranteed to run, however. The Tuban Petro plant in Indonesia, the study cited as an example, has had a sporadic history of operation because of ongoing payments problems. Still, those that do run will generally need condensate regularly.
Based on present projections, the amount of traded condensate in Asia-Pacific will rise to about 1.3 million b/d by 2015, but then possibly drop off. Splitters will take more of the available condensate, refiners will take less. And there may not be much condensate out there for any new condensate splitter project.
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