UPDATE 1-PNG to nearly double crude exports this year
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SINGAPORE, April 1 (Reuters) - Oil liquids from ExxonMobil's gas export project in Papua New Guinea will be blended into the country's only crude blend, the company said Wednesday, almost doubling crude exports by the middle of the year.
ExxonMobil's $19 billion PNG LNG Project is due to begin exports of 6.9 million tonnes of liquefied natural gas (LNG) per year around mid-2014.
Along with LNG, the project will produce about 25,000 barrels per day (bpd) of condensate, a low-density mixture of hydrocarbon liquids that will be blended into Papua New Guinea's existing export stream, the Kutubu Blend, a spokeswoman for the project said.
The additional volumes will result in an almost doubling in production of the Kutubu Blend, Papua New Guinea's only export grade made up of the Kutubu, Gobe, Moran and SE Mananda crude streams. Production of the blend currently stands at around 30,000 bpd, an industry source said.
Kutubu is normally sold in cargoes of 650,000 barrels with 1-2 cargoes per month exported to regional refiners. Exports will rise to 2-3 monthly cargoes by the middle of the year. The first cargo of the new blended Kutubu crude will be marketed by project partner Oil Search Ltd, the spokeswoman said.
As a result of condensate in the mix, the new Kutubu Blend will become lighter with an API of around 49 compared to 44-45 now, an industry source said.
A trader said the quality changes would not be significant, however the rise in number of monthly cargoes could make the blend more attractive to regional refiners seeking steady supply of light sweet crude.
The higher crude exports from impoverished Papua New Guinea come amid stagnating crude production in a region that is increasingly dependent on crude imports.
Asian refiners import more than twice the volume of crude produced regionally, and Asia is estimated to need an additional 300,000 bpd of low-sulphur or sweet crudes in 2014 compared with last year.
A total of 200 million barrels of associated liquids are expected to be produced over the LNG project's 30 year life, Oil Search Ltd said on its website.
Other shareholders in the PNG LNG Project include Australia's Santos Ltd. and Japan's JX Nippon Oil & Energy Corp. (Reporting By Jacob Gronholt-Pedersen; Editing by Ed Davies and Michael Perry)