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Asia starts testing Kuwait’s new super light crude oil

Asia starts testing Kuwait’s new super light crude oil

KUWAIT CITY: At least one Asian refiner has tested samples of Kuwait’s new “Super Light” crude oil and found it suitable, sources with direct knowledge of the matter told S&P Global Platts Tuesday. The test run comes as state-owned Kuwait Petroleum Corp. prepares to launch its first new export grade in decades. A number of refiners in northeast and southeast Asia, a key destination for Kuwaiti crudes, showed their interest in testing the new grade, market sources said. The main target of the fields is the technically challenging, deep and sulfurous Jurassic gas, but there are also considerable volumes of oil. Once all the new facilities are complete, KOC expects to produce 200,000 b/d of light oil. By 2020, the company expects to boost this by another 220,000 b/d.

Crude from the fields will be blended to make KPC’s “Super Light” crude oil grade, which it hopes to start exporting from April. The crude grade will have an API gravity of 48 degrees, with 0.4% sulfur content. Kuwait currently only has one export grade, with a typical API gravity of 31 degrees. It exports around 2 million b/d of that crude, from its total production capacity of just over 3 million b/d. Among possible destinations for Kuwait’s new grade is Vietnam’s upcoming 200,000 b/d Nghi Son refinery, in which KPC’s subsidiary Kuwait Petroleum International has a 35.1% stake. The refinery is expected to start commercial operations this year. A spokesman for Japanese refiner Idemitsu Kosan, which also holds a 35.1% stake in the refinery, confirmed that the plant expects to process Kuwaiti crude oil but declined to confirm whether this would include the new grade. The new grade’s API gravity sits somewhere in between key Middle Eastern ultra-light grades, including Qatar’s Deodorized Field Condensate, and popular light sour Persian Gulf grades like Abu Dhabi’s Murban, hence it is difficult to see the new grade posing direct competition to any major export grades within the region’s light sour crude complex, Asian refinery sources and traders said. Murban has an API gravity of 39.6 degrees and sulfur content of 0.79%, while DFC is an ultra-light crude with API gravity of 60 degrees and sulfur content of less than 0.3%. However, traders were hopeful that the new grade could potentially put the brakes on the recent uptrend in light sour crude price differentials in the Middle East, while providing a new feedstock procurement option for Asian refiners that regularly need to run middle distillate-rich crude oil.