23-07-2018

Kuwait’s Super Light crude oil finds home in Japan and South Korea as Iran alternative

Kuwait’s newly launched Super Light crude oil is increasingly finding a home in Japan and South Korea as the grade has emerged as a possible alternative grade to Iranian condensate, market sources said.

“With ample availability it is an interesting grade,” a source at a Northeastern Asian refiner said. “In the meantime, it is difficult to assess the value of the grade in comparison with other light crudes and condensate.”

Kuwait has loaded five to six cargoes of Super Light crude for export, following its first recent shipment bound for Japan, a source with knowledge of the matter said.

An assay of the new grade attached to the tender document indicates the grade has an API gravity of 48 degrees and a sulfur content of 0.357% weight. In addition, the grade has a total acid number of 0.094 mgKOH/g.

Chief Economist at Japan Oil, Gas and Metals National Corp. Takayuki Nogami said Kuwait’s Super Light crude could be an alternative to Iranian condensate in the context of looming US sanctions.

This is in addition to Kuwait’s export crude blend having been seen as an alternative to Iranian Heavy crude, Nogami added.

Kuwait currently ships around 2 million b/d of its single export grade, which has a typical gravity of 31 API degrees. Most of its exports go to Asia, along with 8% to the US and 7% to Europe.

Importers in Japan and South Korea are facing the need to seek alternatives to Iranian oil, while the governments of the two countries are seeking US sanctions waivers.

President Donald Trump said on May 8 the US would withdraw from the Iran nuclear deal and re-impose sanctions that have been frozen since January 2016 as part of the Joint Comprehensive Plan of Action.

Top US officials have made seemingly contradictory statements in recent weeks about whether the government is considering any relief to allies that rely on Iranian oil imports. The US sanctions snap back November 4 and could block up to 1 million b/d of Iranian oil exports.

Kuwait’s first cargo of Super Light crude was being delivered to Japan as early as this week, the source with knowledge of the matter said, adding that it was a blended cargo as the segregation between the existing Kuwait Export Crude (KEC) blend, and the new Kuwait Super Light crude was not ready at the time of the first cargo loading.

Subsequent stems of the new grade have been transported using segregated logistics from the existing grade, the source said. However, as stability of the grade’s quality is yet to have developed there remains a de-escalator around the quality of the grade linked to its API gravity, the source said.

The new grade is likely to be most appreciated by Japanese and South Korean refiners, the source added.

Most recently, KPC was heard to have issued a tender offering 500,000-barrel cargoes of Kuwait Super Light crude for loading in September and October. The tender, for six cargoes loading over September 1-2, September 8-9, September 13-14, September 19-20, September 25-26 and September 30-October 1, closed on Monday and was valid until Tuesday.

Trade sources indicated that the latest tender might have been awarded to Japanese and South Korean buyers but further details were not immediately clear.

Source: Platts

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