Qatar and Iran raise gas output and produce more condensate

Iran, Qatar and Australia are increasing production of natural gas, raising supply of condensate, a by-product valued because of its suitability as a raw material to be processed into fuels.
Supply of condensate may climb 7.2 % a year until 2010, UK-based consultant Poten & Partners said. Growth in the global economy is leading to higher demand for gasoline and diesel as consumers buy cars and travel further.

Condensate, a type of light oil produced in association with gas, can yield as much as 60 % of light distillates such as naphtha and gasoline. This is double the gasoline yield of most crude. Condensate production may help compensate for a global shortage of light, sweet crude oil that refiners favour for processing into motor fuel.
“Condensate is the champagne of crude,” said John Vautrain, senior vice president at industry consultant Purvin & Gertz in Singapore. “Rising supply is good for everyone, from refiners, chemical makers, to motorists.”

Chemical makers in Asia includingFormosa Petrochemical Corp and Mitsui Chemicals are facing a shortage of naphtha and will benefit from an increase in condensate production, Vautrain said. Asian petrochemical companies rely on Middle East refiners to supply most of the 30 mm tons of naphtha they import each year to produce plastics and synthetic fibres.
The supply deficit may worsen next year, as ethylene producers from South Korea to Singapore boost capacities to tap China’s voracious demand for chemicals. Asia’s naphtha shortage may widen to 34 mm tons next year from the current 30 mm tons, Purvin & Gertz said.

Royal Dutch Shell, Iran’s National Petrochemical Corp and SK Corp, the fourth-largest refiner in Asia, are among companies that started condensate-processing plants in Asia this year to tap the region’s surging demand for petrochemicals.
In the Middle East, the lack of refining capacities forced oil producers such as Iran to spend more than $ 3 bn on gasoline imports annually. Condensate splitters are turning the light oil into transportation fuel, and may ease the country’s motor fuel shortage. Supply of condensate in Iran, holder of the world’s second- largest gas reserves, will increase as the country develops the South Pars field, the world’s biggest deposit of natural gas. In March, Iran invited international contractors to develop several phases of the field.

Shell’s Pearl gas-to-liquids project, which will convert Qatar’s North Field natural gas into motor fuels, will produce 120,000 barrels of condensate a day by the end of this decade. Qatar is the holder of the world’s third-biggest gas reserves, after Russia and Iran.
In Asia, limited refinery production is encouraging refiners to make more gasoline at the expense of naphtha. That is resulted in higher demand for splitters that are able to process condensate into naphtha for plastic manufacturers and gasoline for consumers.

Prices of gasoline have risen against crude oil prices as refiners around the world operate near capacity to keep up with demand. The motor fuel’s premium to crude oil averaged $ 11.17 a barrel in 2006, compared with $ 9.61 in 2005, and $ 5.30 in 2004.
Aromatics Thailand, the nation’s third-largest public traded petrochemical company, will use condensate as a raw material for the aromatics petrochemical complex it is expanding for completion is 2008.