Signs of MTBE found in Rabigh naphtha
Khobar, June 2, 2010
Saudi Arabia-based PetroRabigh said on Wednesday that the gasoline-additive methyl tertiary butyl ether (MTBE) has been found in Rabigh naphtha, a grade used specifically for cracking in petrochemical plants.
Traders earlier said some 200,000 tonnes of Rabigh-grade naphtha contains a high amount of MTBE, worrying its term lifters who may have to scramble for cargoes to fill the possible shortage of the petrochemical feedstock at a time when crackers are still running at full tilt.
'Evidence of MTBE has been detected in naphtha and a technical analysis is ongoing to identify the source,' said the spokesman with PetroRabigh, a joint venture between Japan's Sumitomo Chemical and Saudi Aramco.
'However, PetroRabigh does not produce MTBE nor does PetroRabigh use it at any stage in the production process,' he said in response to a Reuters query.
He did not elaborate on the volumes affected.
Some four customers, including a major, a Western trader, and a North Asian trading house could be affected by the MTBE-tainted naphtha, which contains more than eight times the permissible MTBE levels in open-spec grade.
Traders said surveyor tests revealed the high content of MTBE in the Rabigh naphtha, making it unsuitable for cracking.
Some sources said that Rabigh grade naphtha does not inherently contain MTBE.
'Normal MTBE content in the open-spec grade is very, very little, less than 50ppm, but the MTBE content in Rabigh is more than 400ppm,' said a trader.
Full impact to be determined soon
Traders said a long-range vessel was already loaded with the MTBE-tainted Rabigh grade, and is currently at the Red Sea port.
'The cargoes can be still be sold, but they will have to be sold at huge discounts because they are off-spec after all,' said a Southeast Asian trade source.
'You will need to have huge tanks to blend these volumes back to the right specifications (for cracking purposes).'
Saudi Aramco, Asia's top naphtha supplier, sells five naphtha grades for 2010 loading, namely A180, Rabigh, Jubail, A310 and Jeddah.
It has set premiums for July-December 2010 lifting at $17.00-$21.00 a tonne to its own price formula on a free-on-board (FOB) basis, with Rabigh being the most expensive among the grades.
Its buyers of the various grades include Cargill, Itochu, Marubeni, Chevron, Shell, PetroChina and new lifter ConocoPhillips.
The MTBE-stained naphtha is coming at a time when crackers are still mostly running at full-tilt and that the West-East arbitrage window is technically shut after 1.2 million tonnes of Western naphtha were booked for May-July arrival, or an average of 400,000 tonnes a month for the three-month period.
Crack spreads, the premiums/losses obtained from refining Brent crude into naphtha, rose marginally by 19 cents to $117.88 a tonne on Wednesday.
The full impact of the MTBE-tainted Rabigh grade has yet to assessed.
'We need to talk to the traders and end-users to get a feel of the sentiment. But an end-user is re-diverting a non-Saudi Aramco cargo to help one of Saudi's Rabigh customers,' said another trader.
Some 10 years ago, Saudi Arabia's A180 naphtha grade had more than 150 times more MTBE than the normal levels.
'MTBE finding its way into naphtha can happen during discharge and pipeline transfers among other things,' said a source.
'It may take Saudi Aramco more than a month to rectify the issue,' said another source.
Industry sources said the MTBE from a shore tank might have found its way into the storage holding the Rabigh grade naphtha, but it was not immediately known how the contamination happened. – Reuters