Overview
FGE’s detailed assessment of the mid- to long-term outlook for condensates provides comprehensive coverage of the key challenges facing the market today. In this study, we forecast condensate supply and demand globally using bottom-up modelling to explore trends in condensate trade and pricing from now until 2040.
2023 was another eventful year for the oil and gas market.
Sanctions resulting from the ongoing Russia-Ukraine war prompted some condensate splitter operators in East Asia take in more volumes of the more heavily discounted HFRN cargoes from Russia. Yamal condensate continued flowing to ARA thanks to TotalEnergies’ stake in the project, but progress in the Arctic LNG 2 project faced roadblocks. Escalating tensions have also led to drone strikes on Russian oil and gas facilities, including the Ust-Luga condensate splitter and the Tuapse refinery in early 2024.
Sanctions on Venezuela were temporarily lifted in October 2023, allowing the country to ramp up naphtha diluent imports from the US – though Iranian condensate continued flowing for developments with non-US/EU partners. However, the US has warned that it might reimpose sanctions on Venezuela if it does not uphold its promise of a “free and fair” presidential election.
There were a few new condensate streams in 2023. In July 2023, Reliance started production at the MJ field, but volumes will likely remain captive in India. In 3Q 2023, Iran started production at South Pars Phase 11 and will bring more wells online in the coming years. Meanwhile, output from new developments that came onstream in 2022 (Mozambique’s Coral and Israel’s Karish) continued ramping up through 2023.
In 2024, condensate splitter demand in Asia Pacific should recover more significantly despite a heavier maintenance schedule for Middle Eastern splitters. Aromatics margins could find strength from a somewhat healthy global gasoline complex, but firmer progress on refineries in the Atlantic Basin will weigh on global octane demand later in the year.
In the next decade, we expect market uncertainty to increase. On the supply side, Iran’s condensate surplus should dwindle with new projects on the horizon. However, Qatar’s North Field expansion project and Saudi Arabia’s Jafurah basin will massively expand regional condensate exports.
There remain assets with significant condensate export potential in countries such as South Africa, Vietnam and Russia that could emerge in the coming years.
There remain assets with significant condensate export potential in countries such as South Africa, Vietnam and Russia that could emerge in the coming years.
On the demand side, while we could see one or two merchant splitter condensate projects materialise by 2030, there are many other factors to consider. Dynamic shifts in the naphtha and petrochemical markets as well as the overall refining complex will set the tone for condensate markets in the long run.