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Chevron has sold the first cargo of condensate—the ultra-light oil often produced alongside natural gas—from the Wheatstone LNG facility in Australia to Thailand’s PTT, Reuters reported on Monday, quoting three sources familiar with the deal.
The first condensate cargo out of Chevron-operated Wheatstone—that started liquefied natural gas (LNG) production in October last year—comes at a time when Asia’s condensate market is tight as Iran and Malaysia are curbing some of their ultra-light supply.
Demand from Asian refiners and petrochemical makers boosted the spot price of a key Qatari condensate last month to a one-year high. The Iranian tanker carrying condensate to South Korea that crashed into a Chinese freight ship on January 6 and later sank, also contributed to boosting prices, traders told Reuters last week.
Qatar, Iran, and Australia are the key condensate suppliers to Asia, and now Australia is adding more to its supply with the sale of condensate from the Wheatstone LNG facility.
According to Reuters’ sources, the 650,000-barrel condensate cargo that Chevron has sold will load this month, and pricing was likely set at a small discount to dated Brent.
The condensate is expected to have an API gravity of about 66 degrees, the sources told Reuters.
Woodside Petroleum, which has 13 percent in the Wheatstone LNG project, could sell a second condensate cargo from the facility likely to load in April or May, according to the sources.
This year, Asia’s shortage of condensate could widen to more than 90,000 bpd, up from around 70,000 bpd last year, Ong Han Wee, a senior analyst at consultancy FGE, told Reuters last week.
Supply from Australia’s LNG projects—Wheatstone and the upcoming Ichthys—could ease the market tightness, but it would depend on when Ichthys will start up, the analyst said.
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Traders expect this year to see price volatility in Asia’s condensate market, with expected increase from Australia and a decrease of Iranian supply, according to Platts’ oil and gas outlook for Asia.
Ichthys condensate production is expected to begin towards the end of March this year.
Iran, on the other hand, is planning new condensate splitters at home that would lower its condensate exports. This could make Asian refiners seek North American, African, and European condensate grades, with the Eagle Ford condensate seen as a good alternative to Iran’s South Pars.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.