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As Iran supply dries up, South Korea petrochemical firms find new, costly oil sources

December 06/2018

MOSCOW (MRC) - With supply from major producer Iran uncertain, big condensate user South Korea is scouring the world for alternative sources of this key ingredient in its large chemical industry to avert shortages - a process that is proving to be costly for buyers, said Hydrocarbonprocessing.

Condensate, a type of ultra-light crude oil, is a feedstock for South Koreas petrochemical industry. A by-product of natural gas production, Iran and Qatar are major condensate suppliers. But Irans exports have fallen sharply this year as production in its South Pars gas field struggles to keep up with rising domestic demand while renewed U.S. sanctions on Irans petroleum industry crimp exports.

With Iranian condensate in the past years making up more than half of Koreas overall supply, the shortfall is forcing Korean buyers to seek alternative supplies.

SK Incheon Petrochem, a unit of SK Innovation, Hyundai Chemical, a subsidiary of Hyundai Oilbank Corp and Hanwha Total Petrochemicals Corp (HTC) are South Koreas biggest condensate buyers.

There is huge uncertainty over sanctions, and we cant build a strategy with huge uncertainty in volume, said Sebastien Bariller, senior vice president of feedstock purchasing, energy and optimization at HTC.

Even if the United States extends waivers on sanctions, South Korea is bound by Washingtons condition to continue to reduce Iranian oil imports, said Kim Jae-kyung, research fellow at the Korean Energy Economics Institute (KEEI).

South Korea needs to look for other sources, he said. Bariller said 2018 had been very special and difficult because there were no more supplies from Iran since the middle of the year. HTC had bought condensate from nearly all alternative origins, he said.

The U.S. sanctions and rising domestic demand could cap Irans South Pars condensate exports at 100,000-200,000 barrels per day (bpd) in 2019-2020, down from 400,000-500,000 bpd in 2017, according to consultancy FGE.
Author:Anna Larionova
Tags:petroleum products, Crude oil, petrochemistry, Iran.
Category:General News
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