Phase two of the refinery in Bandar Abbas opened two weeks ago with a capacity to process 120,000 barrels per day (bpd), with the next phase expected to come on stream in mid-2019.
Condensate is an ultra light oil which is processed in splitters to produce mainly naphtha - a gasolineblending component and a feedstock for plastics and other petrochemical products. Iranian condensate comes from the country’s giant South Pars field in the Persian Gulf.
South Korea and Japan are major customers of South Pars condensate, favoring the grade for its rich naphtha yield as well as its relative cheapness to other condensate grades.
An oil tanker carrying 136,000 tonnes of Iranian condensate to South Korea sank in the East China Sea in February after collision with a cargo ship, leaving all the 32 crew on board presumably dead.
Iranian officials say the country’s policy is to reduce condensate exports and use the substance in production of value-added goods.
The Persian Gulf Star with a capacity of 360,000 bpd is on course to become the Middle East’s biggest condensate refinery.
President Hassan Rouhani inaugurated phase 1 of the refinery in March 2017. The completion of the second phase takes its capacity by 120,000 bpd to 240,000 bpd, with the third phase expected to add another 120,000 bpd of capacity.
Phase two of the refinery, however, is still in its commissioning phase and not running at full capacity yet, an unnamed source at the National Iranian Oil Company (NIOC) was quoted by Platts as saying Tuesday.
His remarks came as major customers of the Iranian condensate said they had not received any notice on possible cuts to their 2018 allocations despite the opening of phase two of the Persian Gulf Star Refinery.
Nevertheless, Iran gradually moves to reserve more of its output for domestic consumption. "Naturally we are going to cut because when second phase comes, we have to cut," the NIOC source said, according to Platts.
South Korea's SK Energy and Hanwha Total Petrochemical as well as Japan's JXTG Nippon Oil & Energy Corp. are some of the regular term buyers of South Pars condensate.
Hanwha Total, South Korea's largest petrochemical company, currently has a term agreement to lift 105,000-130,000 bpd of South Pars condensate this year, according to Platts. South Korea's Hyundai Oilbank and SK Energy will be lifting around 80,000-95,000 bpd over the same period.
South Korea is a traditional customer of Iranian oil but its imports sharply fell in January. According to Korea Customs Service data, the country imported 6.96 million barrels of crude and condensate from Iran in the month, down 20% month on month and 53% year on year.