15/12/25
Viewpoint: Saudi condensate to lead supply rise in 2026
Singapore, 15 December (Argus) — The Asian condensate market is bracing for the
introduction of a new grade from Saudi Arabia in 2026, which may cause
significant pricing disruptions if demand cannot keep pace with the rise in
supplies. Condensate loadings from state-controlled Saudi Aramco's new Jafurah
natural gas project should start in the first quarter of 2026 , in cargo sizes
of 500,000 bl, traders said. Some expect 3-4 spot cargoes a month to be made
available. Jafurah condensate, with an API gravity of 49.75° and sulphur content
of 0.16pc, appears to be similar in quality to Australian Ichthys and Qatari
condensates, which are rich in naphtha and middle distillates. It may also
compete with lighter crudes like US light sweet WTL. Jafurah's ramp-up speed
will be a critical factor for 2026, and some traders think condensate prices
will have to be gradually adjusted lower when the new supply comes. Buyers may
initially be hesitant to commit to Jafurah condensate given its quality is
untested, so its impact on similar-quality grades may not be immediate. The bulk
of condensate produced in Asia-Pacific and the Mideast Gulf goes to the UAE,
South Korea, Singapore and China, mostly to splitters. Any potential price
decline next year resulting from more supply may be capped by expectations of
condensate offers from Qatar's North Field East (NFE) expansion project emerging
only towards the end of 2026, with its effects not anticipated to be felt until
2027. This is perhaps a strategic move aimed at preventing a flood of supply in
2026 that would drive down prices even more, a Singapore trader said. The
project is supposed to start up in mid-2026 . State-owned QatarEnergy (QE) has,
in the meantime, struck several long-term supply deals with the UAE's Enoc ,
Japan's Mitsui and a Singapore unit of Shell . "[They have] covered some of
their [supply] lengths already, but [there is] still a lot more," a trader said.
QE typically sells its Qatari Low Sulphur Condensate (LSC) and Deodorized Field
Condensate (DFC) — also produced at the North Field — via regular tenders, and
traders expect condensate from the expansion project to be of similar quality to
these. Qatar is the world's third-largest condensate producer, behind Russia and
the US, according to IEA figures, and QE's LSC and DFC account for a quarter of
the world's internationally traded condensate. These volumes were nearly 850,000
b/d last year, data from oil analytics firm Vortexa show. Australia is also a
major condensate supplier, shipping about 180,000 b/d last year, mainly to Asian
buyers. Demand outlets One potential source of demand for these new condensates
is China, given its need for naphtha as a feedstock for its expanded
petrochemical capacities, while middle distillates produced from splitting the
condensates can be sold off, traders said. Recent US sanctions on Russia — a
major global exporter of naphtha — have made buyers, including China, reluctant
to take Russian naphtha . China imported around 77,000 b/d of condensate last
year, Vortexa data show. Iranian sour South Pars condensate accounted for close
to 50pc of that, which was probably discounted because of Iranian sanctions, so
any replacement supplies would have to be priced competitively for China to
consider switching. Singapore's 70,000 b/d Bukom splitter could be another
source of condensate demand once it is properly up and running , traders said,
adding to the 237,000 b/d Bukom refinery's purchases of grades like Qatari
condensate. Refiners often view heavy condensates as an alternative to
ultra-light crude feedstock and could turn to such supplies if they are priced
at a level that makes sense for them economically compared to regular crude
grades. In the past, firm prices for light sour crudes like Abu Dhabi Murban had
prompted some refiners to turn to Qatari condensates. Otherwise, Aramco
especially may be banking on replacement demand from buyers in South Korea, the
UAE and Singapore, hoping to switch some of their purchases away from Qatari and
Ichthys condensates, as well as lighter crudes, traders said. If there is
insufficient demand for the additional supplies, some condensates can even be
blended with crude to create lighter grades of crude, a Singapore trader said,
optimistic that the market will somehow find a way to absorb these extra
supplies over the next few years. By Reena Nathan Send comments and request more
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