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June Goh Profile picture
@JuneGoh_Sparta
Mar 20 • 10 tweets • 3 min read • Read on X
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Here is the compilation of all my posts regarding the basics of crude, condensates and refined products to help you make sense of how bad the situation is for each product.

1) Crude - The tussle for crude leading to high crude premiums and the mismatch of crude qualities to replace the medium sour crude that Asia sorely needs

2) Condensates - The impact of Qatar LNG outage to the oil and petchem world

3) Naphtha + LPG - The basic building blocks of plastics and the bare necessities of life

4) Mogas - the most politically charged barrel but the easiest to solve in the current crisis

5) Jet fuel - The most stressed barrel because you can only get jet fuel from refineries

6) Diesel - The workhorse of the barrel. You need this fuel in industry, power gen, mining, fishing.

7) Fuel oil - The forgotten, unloved barrel but is now priced higher than crude. This is used predominantly as bunker fuel in many of our ships, so again - no crude for refineries = no bunker fuel produced

Sharing is caring. Repost if you care. #oott
Crude:
1. spartacommodities.com/insights/the-t…

2. spartacommodities.com/insights/signa…
Condensates:
Naphtha + LPG:
Mogas:
Jet fuel:
Diesel:
Fuel oil:
Do follow @SpartaCommo for up-to-date insights of what's going on in the oil markets. You need to. #oott
Lastly, please note that I am really overwhelmed and unable to answer all your messages. I am trying my best to help so please do not take offense if I really can't find time to answer you. Thank you!

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More from @JuneGoh_Sparta

June Goh Profile picture
Mar 15
Since the start of the crisis, I have covered the basics on the following physical oil from an Asian refiner's perspective:
1) Crude
2) Naphtha + LPG
3) Mogas
4) Jet fuel
5) Diesel
6) Fuel oil

Links in the thread below for easy reference.

I hope this will be a helpful resource for many out there who do not understand how crude gets converted to a refined product, and therefore why the pricing and availability of different fuels will be impacted quite significantly for a bit longer than you would have anticipated.

#oott
Crude:
Naphtha + LPG:
Read 8 tweets
June Goh Profile picture
Mar 15
Naphtha and LPG are the light end of the refining barrel, and boy, oh , boy, how important their roles are in the world that we live in.

Naphtha (also known as Tops/FRN/LVN/HVN) is the basic building block for petrochemical plants. You feed naphtha into steam crackers to produce olefins like propylene, ethylene and butadiene, which is then used for downstream petchem products. This is the very starting point of where any of our plastics come from. Naphtha is also a key blending component into mogas.

As I shared in my very early note (attached in this thread), naphtha was the first to get hit when the Strait of Hormuz flow was disrupted. Asia is dependent on 60% of the naphtha flows coming out of the Middle East into our very hungry steam crackers. To make matters worse, domestic refineries were also turning down, which means less domestic naphtha available to feed the hungry crackers.

What that entailed was then a series of Force Majeure announcements in quick succession across petchem producers in Asia. You just can't run if you don't have enough feedstock. The steam crackers work in a similar way as refineries - it's either min 60% or zero (also attached in this thread for easy reference). The law of physics must be fulfilled. Furthermore at min refinery intake, the light naphtha cut has to be pulled a little bit more into the heavy naphtha feed for the reformer in order to be feasible and produce enough hydrogen to make the hydrotreaters and desulphurizers for diesel to be onspec.

LPG plays a supporting role here - it is also a feedstock into steam crackers, albeit at a lower percentage than naphtha. LPG is also used as cooking gas in many countries, particularly India. The yield of LPG from the refining kit is only a mere ~1-2%, yet imagine needing to turn down the intake and get only 0.5-1% yield. That's a drastic 50% reduction of available supply, plus the Middle East is also a significant source of LPG into India.

India and Indonesian government then quickly mandated for max LPG to be diverted out from the petchem sector into cooking gas.

Some of you asked whether the petchem system in Asia can switch into ethane feedstock. Unfortunately, there are not many steam crackers with that flexibility. Those that have announced FM are the ones that do not have. There will be more to come if the situation at the Straits of Hormuz remains unresolved.

So petchem was the FIRST to shutdown because of lack of feedstock. It will also be the LAST to start up because we need to establish enough flows from the refineries that will take at least 2 months to ramp up before the petchem side can restart as well.

In summary, the petchem folks got it really bad. And I just can't see a solver for this until the Asian and Middle East refineries are running at a higher intake.

#oottImage
This is the first time I rationalized the impact of the Strait of Hormuz disruption on 1 March:
This is the refining min intake capabilities:
Read 4 tweets

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