Japanese Import of WTI Cargo Follows Shipments of Condensates

  • Tighter gravity specifications make crude more attractive
  • Export of U.S. condensates to Asia `has not gained traction'

Japanese refiner Cosmo Oil Co. is trying out a shipment of West Texas Intermediate oil after U.S. condensates didn’t work well at Asian chemical plants, Bloomberg Intelligence analyst Gurpal Dosanjh said.

Cosmo is importing 1 million barrels of WTI and condensate for trial runs at its Chiba and Yokkaichi refineries, according to a person familiar with the matter. The cargo is to be loaded next month in Houston.

“The export of U.S. processed condensates, largely from the Eagle Ford region, into Asia has not gained traction,” Dosanjh said by phone. “The choice of West Texas Intermediate could be tied to the fact that as a benchmark it will have a tighter specification and more consistent quality than Eagle Ford condensates.”

The WTI futures contract on the New York Mercantile Exchange specifies a gravity range of 37-42 API, according to the Chicago Mercantile Exchange’s rule book. Condensates, which are lightly processed and whose exports have been allowed for more than a year, have a wider gravity range. Cosmo’s condensate purchases include a 700,000-barrel cargo for delivery in December.

“Eagle Ford condensates have gravity specifications from 55-70 API,” Dosanjh said. “Asian buyers have had to deal with inconsistent specifications with each delivery and having to adjust their plants.”

A single cargo for trial isn’t that important, Energy Aspects analyst Dominic Haywood said in an instant message. Dosanjh said it’s not economic for most regions to import U.S. crudes right now.

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