Condensate buyers in Asia say they may consider taking US exports in the wake of a ruling that would allow US companies to send lightly processed condensates overseas.
Asian condensate users could seek U.S. supplies of condensates as demand in the region is expected to climb as new splitter capacity comes on line this summer.
"We don't mind if it's processed condensate or not," said a buyer with a South Korean refinery. "Some splitters can process even ultra-light crude. It's not a big deal."
The US Commerce Department granted two companies that produce shale condensate from the Eagle Ford formation -- Pioneer Natural Resources and Enterprise Products Partners -- licenses to export the condensate as long as it is processed through a distillation tower.
"I think [the condensate will come] here this way, Japanese and Koreans [will buy it]," said a Singapore-based trader.
The production of U.S. condensate -- very light hydrocarbons that have typically been re-blended with crude oil during production -- has dramatically increased amid the ongoing shale boom, and condensate production in the Eagle Ford has greatly outpaced blending capacity.
The US decision comes as three new condensate splitters are set to come online.
South Korea's SK Innovation is starting test runs on its two splitter towers, each with capacity of 100,000 b/d, at its refinery in Icheon, South Korea, in June.
Samsung Total, a joint venture between South Korea's Samsung Group and French major Total, plans to start production at its 150,000 b/d splitter at Daesan in July or August. The splitter is part of a new Won 1.66 trillion ($1.56 billion) aromatics plant.
Also, Singapore's Jurong Aromatics Corporation will bring its 75,000-100,000 b/d splitter online in June, which will see the production of aromatics as well as across-the-barrel oil products.
Other Asian countries may also be looking at US condensates. Japan's largest refiner JX Nippon Oil & Energy confirmed Wednesday that it is looking at importing US condensates, among other options.
"With a view to diversifying our supply sources, we are studying various possibilities of procurements, not just limited to the US or Canada," a JX spokesman said.
JX has a combined capacity of 98,500 b/d over two condensate splitters at its Mizushima and Kashima refineries in Japan.
South Korean buyers may be able to take advantage of a free trade agreement with the US. However, if the condensate is classified as a refined product leaving the US after being processed, that may negate the tax advantage, said the Korean buyer.
A US Commerce Department spokesman on Tuesday reiterated that there has been no change in US export policy on crude oil. "Consistent with the regulatory definition, crude oil that has been processed through a distillation tower which results in the crude becoming a petroleum product is no longer defined as crude oil," Commerce spokesman Jim Hock said. "Petroleum product can be exported without a license, except in very limited circumstances."
