FGE’s detailed assessment of the mid- to long-term outlook for condensates provides comprehensive coverage on the key challenges facing the market today. In this study, we forecast condensate supply and demand globally using bottom-up modelling to explore the impacts and trends for condensate trade and pricing up to 2040.
The year 2021 was touted as a year of recovery. However, there were many variables during the year that caused turbulence in global oil and petrochemical markets. The year began with Storm Uri in the USA, an event which kickstarted a chain reaction that was felt throughout global petrochemical markets in the months that followed.
Moving further into the year, we saw light distillates leading the barrel’s recovery as motorists in key markets took to the roads once more. By late 2021 gasoline demand had met or surpassed pre-COVID-19 levels in several regions. In addition, naphtha demand was strongly supported by continued growth in petrochemical demand as alternative feedstock LPG remained uneconomic to crack for most of the year. Meanwhile, in 4Q, power curtailments in China amid emission controls and energy shortages, coupled with several new local petrochemical start-ups, led to very mixed impacts across the petrochemical spectrum.
This year appears to be ending in the same way it started, with condensate differentials rising in line with the strength in light distillates and the wide backwardation in crude.
As always, the coming year will be one to watch. The next wave of large-scale petrochemical additions in China might be the last nail in the coffin for aromatics margins as we head towards the upcoming downcycle. On the supply side, the restart of US-Iran nuclear talks is taking front and centre stage. Meanwhile, concerns over the return of Iranian South Pars Condensate (SPC) volumes hang over the market. Will we see a new nuclear deal and the floodgates open for Iranian SPC?
Outlook for 2022
- We will explore the impacts of the potential return of Iranian SPC to the market.
- Key drivers of splitter margins through 2022, from the refinery gate to aromatics and olefins: What will drive condensate differentials in 2022?
- A monthly outlook on the evolution of condensate balances in 2022.
- A look at the new kids on the block – e.g. the viability of condensate splitter projects East of Suez over the next 10 years?
- Opportunities for refiners – a surplus coinciding with light distillate strength.
- A look at the evolution of condensate balances through the 2020s and what it means for prices.