South Korea is looking for a replacement for Tehran's oil which it will no longer have access to after May, now that the United States intends to tighten sanctions on Iranian exports. The country is the biggest buyer of Iran's condensate.
SK Incheon Petrochem Co Ltd, Hyundai Oilbank Corp and Hanwha Total Petrochemical are set to once again scan the world for alternative, but more expensive, condensate supplies and snap up heavy naphtha oil products for their processing units, known as splitters, industry sources and analysts said.
In 2018 South Korea bought and tested up to 23 different types of condensate from 15 countries as a potential substitutes for Iranian condensate, at a cost of about $9 billion, government and trade data analysed by Thomson Reuters showed.
This year South Korean refiners did not have to look hard as they made full use of the Iranian oil volumes allowed under the US waivers by importing only Iranian condensate. However, those waivers will expire on the 1st of May.
The country is set to import about 249,000 barrels per day (bpd) of Iranian South Pars condensate by the end of April, 70 percent of the total volume of condensate it imported last year, the data showed, much more than it needs in the first half of 2019.
The country’s condensate demand has also fallen in the first half of this year as refiners cut runs at splitters on poor naphtha margins and as Hanwha Total shut a splitter for maintenance, the sources said, according to Reuters.
SK and Hanwha Total may replace condensates by buying more heavy naphtha, a raw material for petrochemicals. Low naphtha prices could help repeat a spike in imports that happened in late 2018.
Hanwha Total, which operates two condensate splitters, last year raised its monthly average imports of heavy naphtha to 400,000 tonnes from 250,000 tonnes in the absence of Iranian condensate.
