Iran, Qatar alter condensate strategy

Iran and Qatar could soon retreat from their near dominance of the Asia-Pacific condensate market as domestic downstream expansion absorbs more of their output, according to Petroleum Argus.

Tehran has supplemented lower crude exports as a result of international sanctions since 2012 with condensate. But condensate exports, forecast at 300,000 b/d this year, will be phased out as new splitter projects are completed, Oil Minister Bijan Namdar Zanganeh says. Iran has already broken ground at the Siraf condensate splitter site in Assaluyeh, where it plans to build eight 60,000 b/d splitters within the next three years. 

This timeframe will prove ambitious for cash-strapped Iran, but Tehran will turn to the private sector to help fund the project and says it will pave the way for foreign investment once the sanctions ease. However, foreign interest in downstream projects has been muted. And Iran has a backlog of partially completed projects, including the much-delayed 360,000 b/d Persian Gulf Star splitter in Bandar Abbas, US-based consultancy Apec says in a forthcoming study on the global condensate industry.

The first 120,000 b/d phase should be commissioned in 1Q2016, with the latter two phases expected to start up in 2Q and 4Q2017. The Bandar Abbas facility will share reforming and hydrotreating units, setting it apart from typical splitters. Iran has 232,000 b/d of splitter capacity, and also blends much of its onshore condensate production and a small amount of its offshore output into the crude pool.          

Expanded use of condensate in the petrochemicals sector is important if Iran wants to absorb all of its condensate output. Phases 15 and 16 of Iran’s giant South Pars field development are nearly complete and will produce 75,000 b/d of condensate. Iranian output will rise to 712,000 b/d by 2021 from 548,000 b/d this year.

Qatar produces 775,000 b/d of condensate, mostly from the North field. The country, which shares the world’s largest conventional gas reservoir with Iran’s South Pars, aims to slow condensate exports as it lifts domestic splitter capacity. Nearly 40% of Qatar’s main DFC export grade will be diverted to the new 146,000 b/d Ras Laffan 2 condensate splitter once it hits capacity in 2018.

US condensate, although not a direct competitor to Iranian and Qatari supply because of its higher particulate content, will replace at least some of the Mideast Gulf sales to the Asia-Pacific. A reinterpretation of an existing law last year allowed the export of lightly processed condensate from the US, where output is growing because of shale gas production. In addition, the expansion of the Panama Canal, likely to be completed in 2017, will increase the competitiveness of US Gulf coast condensate exports (see Petroleum Review, December 2014).

Figure 1: Condensate outlook, in ‘000 b/d

Source: Petroleum Argus