April 2, 2018 / 9:40 AM / 8 months ago

South Korea's Hyundai Oilbank buys first Norwegian condensate - sources

(Reuters) - South Korean refiner Hyundai Oilbank Corp [INPTVH.UL] has bought its first ever Norwegian condensate cargo as it sought supplies from outside Asia to replace Iranian barrels, two sources with knowledge of the matter said on Monday.

FILE PHOTO - A woman walks past a self-service fuel pump station of Hyundai Oilbank in Seoul June 15, 2012. REUTERS/Choi Dae-woong

Other South Korean condensate buyers are also hunting for other supplies of the ultra light oil apart from Iran in case the United States imposes more sanctions against the Islamic state.

Hyundai Oilbank bought 700,000 barrels of Ormen Lange condensate from Statoil for delivery in June, the sources said.

A spokesman for Hyundai Oilbank declined to comment and officials of Statoil could not be immediately reached for comment.

“The condensate market is very tight so they’re buying whatever they can,” one of the sources said, referring to Hyundai Oilbank.

The National Iranian Oil Company has cut supplies of South Pars condensate to South Korea by 3 million barrels each month from the start of this year, three sources said, as production dropped and as the country started operations of a new splitter.

Iranian condensate exports to Asia fell 39 percent in the first quarter to around 348,000 barrels per day from the same period a year ago, according to data from a source who tracks monthly supplies.

South Korean buyers, including SK Energy and Hanwha Total Petrochemicals [SMCHE.UL], are also looking for other condensate supplies from Australia, Qatar and Equatorial Guinea to replace Iranian oil and they have also bought heavy naphtha as an alternative feedstock for their plants, the sources said.

“It’s not the origin we care about the most, it’s the price and how well the oil fits in our plants,” said a source at a South Korean refiner that is also chasing non-Iran condensate.

“It seems many are seeking to diversify their condensate supplies because we don’t want to be caught off guard if the U.S. imposes sanctions against Iran in May.”

The sources declined to be named for this story because they are not authorized to speak to the media.

Qatar has benefited from reduced Iranian supply, with spot premiums for Qatar’s Deodorized Field Condensate hovering near their highest in a year.

Still, the tight supply situation could improve for Hyundai Oilbank in the fourth quarter as the refiner will be able to process light crude in addition to condensate, the sources said.

The company plans to shut its 130,000 barrels-per-day splitter in Daesan in September for maintenance for nearly a month, they said.

Splitters process condensate for fuel, specifically naphtha, to make petrochemicals.

Reporting by Florence Tan and Jessica Jaganathan in SINGAPORE, Jane Chung in SEOUL and Osamu Tsukimori in TOKYO; Editing by Manolo Serapio Jr.

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