South Korea is the biggest client of Iranian condensate with 300,000 barrels per day (bpd) on top of 100,000 bpd of crude oil, but supplies are flagging as the Asian country faces US pressure to reduce imports from the Islamic Republic.

In Iran, the giant South Pars gas field is struggling to keep up with rising domestic demand because several major projects, including Persian Gulf Star Refinery and Siraf Refining Park, are coming online.

Condensate is an ultra light oil which is processed in splitters to produce mainly naphtha - a gasoline blending component and a feedstock for plastics and other petrochemical products.
Asian customers favor South Pars condensate for its rich naphtha yield as well as its relative cheapness to other grades.
  However, falling Iranian supplies mean they have to turn to alternative sources of high feedstock costs which are eroding the competitiveness of their petrochemical industry.
Apart from costlier feedstock, Korean buyers may need to retrofit their facilities that are used to Iranian condensate, Kim Jae-kyung, research fellow at the Korean Energy Economics Institute (KEEI), told Reuters.

The United States is reportedly pushing its fast-growing condensate, and also naphtha, on South Korea. A by-product of natural gas production, Iran and Qatar are currently major condensate suppliers.

Using new condensate grades from the United States, however, could cause technical problems, including the handling of residue and contaminants such as metals in US Eagle Ford condensate, Reuters quoted industry analysts as saying.

"It's not easy to find condensate of similar quality to Iran's," Kim told the news agency on Tuesday. 

South Korean buyers, he said, may have to spend hundreds of millions of dollars to re-configure their splitters if they want to process US condensate.

So far, South Korean companies have had to pay high premiums to secure enough condensate to meet more than half of their demand, the report said. New shipments have reportedly come from Saudi Arabia, Libya and Australia.

According to Sebastien Bariller, senior vice president of feedstock purchasing, energy and optimization at Hanwha Total Petrochemicals Corp (HTC), 2018 has been "very special and difficult" because of drop in Iran supplies.
  South Korea is among the eight major clients of Iranian oil, given an exemption by the US to continue imports but the Trump administration is adamant on its pledge to bring Iran’s supplies down to zero.

On Tuesday, Iranian President Hassan Rouhani said no oil will leave the Persian Gulf if the US blocks Iran’s cargoes.

"America should know that we are selling our oil and will continue to do so and America is not capable of stopping Iran’s oil exports,” he told a crowd of people in the central city of Shahroud.

“And they should also know that if they seek to block Iran’s oil someday, no oil will be exported through the Persian Gulf," he added.

The Persian Gulf is about 56 km wide at its narrowest in the Strait of Hormuz through which about 18.5 million barrels per day of crude and refined products, or about 30% of all seaborne oil exports, are transited.
  Rouhani said the United States cannot cut Iran’s trade ties with the world either.
Tehran is currently awaiting the European Union to operationalize a special purpose vehicle to facilitate non-dollar financial transactions with Iran.

Rouhani said Iran will try to expand its relations with its neighbors as well as Muslim nations and the world despite US efforts to isolate it. 

“The United States is trying to move Europe away from Iran; it is trying to separate China, India and its neighbors from Iran and promote Iranophobia in the region, but we are not and will not be an enemy of any nation or our neighbors.”

/SR