CONDENSATE EAST OF SUEZ: NGL and its Naphtha Impacts in Asia

Condensate, one of the two groups defined as Natural Gas Liquids (NGLs), is finally coming of age in world trade, marketing, refining and petrochemicals. Condensate sales are moving from a niche marketing specialty to a mainstream segment of crude and products trade, and nowhere is this more evident than in the Mideast Gulf and Asia Pacific.

The protean nature of condensate allows it to be used in a wide range of sectors: as a refinery slate component; in specialized distillation towers called condensate splitters; in direct feed to ethylene crackers; in gasoline blending and as a substitute for gas in turbine power generation. It can be defined as a base material, a blending component, a feedstock or a boiler feed. Its very flexibility – and the many names and definitions that are common for condensate in the oil industry – have led to some confusion among potential buyers and in a sense that has undervalued this equivalent of light, sweet crude. We believe that condensate will come into its own as a valuable refining and petrochemical feedstock in coming years.

Asia Pacific will be the epicenter for world petrochemical demand growth over the next decade; expanded gas and NGL output in the Mideast Gulf will underpin a ballooning of condensate and condensate-derived naphtha production in that subregion. Asian olefins manufacturers depend on paraffinic naphtha for the vast majority of their feedstock supply. Rising condensate output will have a direct impact on feedstock avails. This will also increase the use of segregated condensate in direct petrochemical feed and expand condensate splitting in both in Asia Pacific and the Mideast Gulf

OTHER KEY DEVELOPMENTS

PRODUCTION

The structural shift to accelerated development of gas reserves has become ever more apparent in recent years, as East of Suez countries seek to transform gas reserves into new base energy supply. New projects mean a sharp and sustained increase in total gas production and in particular marketed gas output, yet increased gas volumes will underpin a continued rise in Natural Gas Liquids (NGL) output. This impacts condensate in particular, which, unlike its Liquefied Petroleum Gas (LPG) counterparts propane and butane, does not require specialized storage and transportation infrastructure for commercial sales.

MARKETING AND TRADE

Condensate trade and marketing was given a substantial boost by the overall strength of base petrochemicals since mid-2006. As naphtha always makes up a majority of the yield derived from condensate, this sector’s strength underpinned a substantial rise in condensate interest – and prices. Refiners too have begun to review condensate purchases as a means to balancing the higher volume of heavy, sour grades that have been available on crude markets.

PETROCHEMICALS

This study details all base petrochemical capacity, olefins and aromatics capacity in the Mideast Gulf and Asia Pacific, current and forecast. The substantial that petrochemicals have on condensate is underlined by the parallel full listing of condensate splitters and petrochemical pre-treatment units for the region.

PRICING

A proliferation of traded grades has helped to broaden the number and range of pricing systems used to market condensate. Traditionally refiners, as buyers, preferred crude linkage, in order to determine condensate price, while petrochemical buyers, above all interested in feedstock values, preferred naphtha-linked pricing. Yet both condensate sellers and buyers have broadened their options and crude-linked and product-linked sales formulas have multiplied.

Flexibility in pricing systems has become a trend among many condensate exporters, with sales adjusted according to sector and geographic region.

There are many who believe that a global condensate market is emerging, which, though small in volume compared to world crude or products trade, should expand rapidly through end-decade.

Table of Contents :

I. Introduction
Condensate … as a Paradox
Production
Demand
Balances
Markets
Condensate & Its Potential
Condensate & Its Profitability
II. Parameters of Condensate
Basic Definitions
Condensate Characteristics
Nature of Utilization
Utilization by Sector: Refining
Utilization by Sector: Splitting
Utilization by Sector: Gasoline and Blending
Utilization by Sector: Petrochemicals  Ethylene
Utilization by Sector: Petrochemicals  Aromatics
Utilization in Power Generation
Utilization as Field Fuel
Moving into Mainstream: Developments since the 1990s

III. Overview of Key Developments
Production
Demand
Marketing and Trade
Pricing

IV. Major Producing Countries
All country markets covered include a supply, utilization and export outlook. Markets detailed include:
Mideast Gulf
Saudi Arabia
Iran
UAE
Qatar
Iraq
Oman
Yemen
South Asia
India
Pakistan
Bangladesh
Southeast Asia
Indonesia
Malaysia
Thailand
Brunei
Vietnam
Myanmar
Philippines
Northeast Asia
China
Russian Far East
Australasia
Australia
Papua New Guinea
New Zealand

V. Condensate Utilization in Importing Countries
Japan
South Korea
Taiwan
Singapore
Thailand

VI. Condensate Splitters & Petrochemical Pretreatment Units
Overview
The Raison D’Etre for Specialized Condensate Processing
Splitter Product Outturn
Naphtha
Kerosine
Gas Oil
Residual
Condensate Splitter Grouping
Future Splitter Trends
Splitters and Future Condensate Prices

VII. Natural Gas, Condensate, Gasoline, Naphtha and LPG Nexus
VIII. Pricing Mechanisms and Future Condensate Prices
IX. Condensate and Gas Developments
X. From Niche to Mainstream  International Trade and Markets
XI. Conclusions

Definitions
Appendices
Base, Low/High Cases — Supply
Base, Low/High Cases — Demand

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