Chinese Petchem Co Buys Iran's Condensate for Trial

Dragon Aromatics has bought its first cargo of condensate from Iran in preparation for the start of trial runs at one of China's biggest independent petrochemicals complexes, trade sources said.
The petrochemical producer, owned by Taiwan's Xianglu Group, snapped up the cargo of super light crude.

The cargo of 1 million barrels of South Pars condensate was bought at a discount of about US$8 a barrel to dated Brent compared with a US$4 discount for a comparable grade low sulfur condensate (LSC) from Qatar, traders said. That implies Dragon is benefitting about US$4 million on the cargo it bought from Chinese state-run oil trader Zhuhai Zhenrong, for delivery on 8 November.

Dragon is expected to start trial operations in December in the complex that includes a 4 million ton-per-year (tpy), or 90,000 barrels-per-day (bpd) condensate splitter, sources close to the project said. The splitter is part of the company's 20 billion Yuan (US$3 billion) petrochemicals complex, located in Gulei port of Fujian province.

The group is set to win government permission to import condensate, making it the only independent operator with such a permit in China. That allows it to buy the cargoes it wants so long as it uses an agent, or one of the country's handful state-designated traders, to clear them through customs, and pays a commission for the service. "We are currently in negotiations for long-term contracts but we will rely on spot imports for the time being," said a company source who declined to give further details.

The company is looking to buy further spot cargoes for December, said the source, who declined to be identified because of the sensitivity of the issue. A senior trading manager with Dragon Aromatics declined to comment on the origin of the cargo, but confirmed that the firm was set to win quotas to import 4 million tons of condensate for 2013 and to cover 500,000 tons of imports by end-2012.

Dragon Aromatics has been in talks with condensate sellers to secure an annual supply. That will still have to be imported through one of the agents, which include Chinaoil, Sinochem, Zhuhai Zhenrong Corp and Unipec, the trading arm of top state refiner Sinopec Corp. "Unipec has existing term supply and they could divert or set aside some barrels for Dragon," one trade source said, but added that Dragon Aromatics preferred to work with Zhenrong. Officials at Zhuhai Zhenrong Corp declined to comment.

Dragon Aromatics is also looking at condensate from Qatar that can yield more heavy naphtha and vacuum gasoil as feedstock for derivative units. It will also need to import atmospheric residue, straight-run fuel oil or vacuum gasoil (VGO) for a 3.17 million tpy hydrocracker at the same site.

Dragon Aromatics is part of the Xianglu Dragon Group which owns synthetic fibre plants in Fujian province. The new condensate splitter is integrated with an 800,000 ton-per-year plant that produces paraxylene (px), intermediate in making polyester. – Tehran Times