Oman crude exports get lighter with growing condensate production

OPEC+ production cuts and rising natural gas output have combined to make Oman's flagship crude export blend lighter over the past year, according to market sources, as the country adds more condensate into the stream.

Customers of Oman Export Blend the vast majority of it purchased by Chinese refiners, say the volumes they are receiving are above the grade's typical API gravity of 33.2 degrees, with some saying it is as high as 35 degrees.

The Platts Oman crude assessment reflects Oman Export Blend and the grade is also deliverable into the Platts Dubai assessment, with the two assessments serving as the primary pricing benchmarks for physical oil exported from the Middle East to Asia, as well as being used by Russia and other crude producers for their crude exports to Asia.

Oman is a member of the OPEC+ alliance and subject to crude oil production quotas, which have ratcheted tighter in a series of output cuts to bolster flagging prices. The quotas, however, do not cover condensate production, which surged to a record high in 2023 of 85.47 million barrels, according to official data – a byproduct of its growing natural gas sector.

In February, Oman pumped 761,900 b/d of crude – just above its OPEC+ quota -- and 232,500 b/d of condensate, figures reported by its National Center for Statistics & Information showed.

Of those barrels, 904,500 b/d were sent to customers as Oman Export Blend in February, all to China, the agency reported.

That compares to 836,000 b/d of crude and 225,000 b/d of condensate produced in February 2023, with 845,000 b/d of Oman Export Blend exported.

Any volumes not exported are typically consumed in Oman's domestic refineries Sohar and Mina al-Fahal, as well as the new Duqm refinery, which is a joint venture with Kuwait.

Oman's oil ministry and state-owned oil company OQ did not respond to queries.

Oman Export Blend is a medium sour crude well-suited to Chinese refineries, who took 92% of the grade's volumes in 2023. Japan was a far distant second, purchasing 3% of Oman Export Blend volumes in 2023, followed by South Korea with 1.7%.

Platts Oman was assessed at $86.195/b on March 26, up almost 12% from the start of the year, as the Middle East sour crude market has tightened from the OPEC+ output cuts.

Oman's rising superlight condensate production comes from the country's increased gas output and a debottlenecking of its LNG export facilities in 2022.

BP produces some 1.5 Bcf/d from Oman's Khazzan field, while OQ, Shell and TotalEnergies have been ramping up output from Block 10, with a target of 0.5 Bcf/d in 2024.

Oman LNG has announced plans to further expand production from 11.5 mt/year to 12 mt/year by 2026 to take advantage of the growing gas volumes.