Iran is set to supply 50% more condensate to Chinese state-owned trader under a renewed one-year supply contract, Reuters has reported.
The National Iranian Oil Company (NIOC) has signed a deal with Zhuhai Zhenrong Corp to supply 100,000 barrels per day (bpd) of condensate starting in August.
NIOC, which has been looking to raise exports to Zhuhai since the second half of 2015, signed the deal about two weeks ago raising supplies from 2mn barrels per month to 3mn barrels.
The news comes as new sanctions agreement was reached in Lausanne this week, under which Iran was given up to six months to meet stringent requirements regarding its nuclear capabilities.
However, diplomats expect it could take much longer to fulfill the requirements, which will ultimately result in sanctions being lifted easing restricitons on Iran’s crude oil exports
China is Iran’s largest oil buyer and the renewed contract could lift its overall crude imports from the Islamic republic to above 600,000 bpd later this year, higher than the average pre-sanction rate of about 555,000 bpd, accoridng to Reuters.
The condensate, a byproduct from Iran’s South Pars gas project, would go to independent petrochemicals producer Dragon Aromatics, which is set to expand its condensate splitter by nearly 40% this month.
Dragon’s condensate splitter, in the Chinese city of Zhangzhou, processes the Iranian oil into liquefied petroleum gas and naphtha, which feeds a paraxylene complex.
The splitter’s capacity will be raised to 137,000 bpd by the end of April from 100,000 bpd. However, while Iranian condensate is relatively cheap, its high levels of sulfide make it less attractive to use.
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