South Korea's condensate imports from Iran to soar in June

SEOUL/SINGAPORE (Reuters) - South Korea, Asia’s largest buyer of condensate, will step up purchases of the ultra light oil from Iran by more than 50 percent in June, two sources said, as competitive pricing squeezes out rival oil from Qatar.

While South Korea does not provide separate data on imports of condensate, traders said the expected June shipments from Iran of at least six million barrels, or 200,000 barrels a day, would be a record level.

Iranian condensate imports could gain further momentum in the fourth quarter, if Iran clinches a deal with Hyundai Chemical to supply the company’s new splitter.

Talks between Hyundai Chemical and the National Iranian Oil Company (NIOC) on a term supply deal are under way, a third source familiar with the matter said.

South Korea, the world’s fifth-largest crude buyer, has more than doubled its oil imports from Iran in the first four months of this year to about 248,000 barrrels a day after Western sanctions on Iran were removed in January.

Iran has ramped up exports much faster than analysts had expected, using international tankers to help ship its oil.

Two South Korean buyers, refiners SK Energy and Hanwha Total Petrochemical Co, are set to lift at least six million barrels of Iranian South Pars condensate in June, up from about 3-4 million barrels in April and May, two sources with knowledge of the matter said.

A Hanwha spokesman said the refiner planned to import about 2 million barrels of Iranian condensate in June, as it was cheaper than oil from Qatar and the company wanted to diversify its sources of supply.

SK Energy officials declined to comment.

Iran’s SPC was as much as $5 a barrel cheaper than Qatar’s deodorised field condensate (DFC) at the start of the year, but the gap has since narrowed to $2-$3, trade sources said. Both products are priced off Dubai crude.

“Compared with DFC, it’s (Iranian condensate) much cheaper. Naturally they’ll want to take as much as possible,” an oil trader said.

Hyundai Chemical, a joint venture between Hyundai Oilbank Co and Lotte Chemical, could be Iran’s next customer as it is due to start trial runs at a new 110,000-bpd splitter in Daesan on the country’s west coast in August-September, trade sources said. Iran’s South Pars Condensate (SPC) could make up more than half of the unit’s feestock, one source said.

A Hyundai Oilbank spokesman said the facility, which splits condensate into fuels like naphtha for use in the petrochemcials industry, would be completed in the second half but declined to elaborate.

Qatari condensate exports are expected to drop from late in the third quarter as the oil will be used to supply a new splitter at Ras Laffan, north of Doha.

Reporting by Hyunjoo Jin in SEOUL and Florence Tan in SINGAPORE; Additional reporting by Osamu Tsukimori in TOKYO and Seng Li Peng in SINGAPORE; Editing by Richard Pullin