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Paraffin, nitrogen, STS, US naphtha issues to dominate 27th OSN meeting in Japan

Increase font size  Decrease font size Date:2018-04-12   Views:545
Paraffin content, mercury testing method and nitrogen are some of the issues that will be discussed at this year's 27th Open Specification Naphtha meeting in Fukuoka, Japan, on Thursday and Friday, according to a meeting documentation obtained by S&P Global Platts this week.

The annual meeting will see petrochemical producers, naphtha traders and oil majors gather to discuss, debate and vote on specifications and terms of the CFR Far East Open Specification Naphtha Contract that governs OSN trading in Asia.

South Korean end-users will once again be advocating for the minimum paraffin content to be raised to 70% from the current 65%, based on meeting materials obtained by Platts.

South Korean end-users have been seeking naphtha with minimum 70% paraffin content in their buy tenders, while Japanese end-users are able to accept 65% minimum paraffin. This issue was discussed in last year's meeting, but there was no consensus to raise the paraffin content.

Japanese end-users plan to propose at the meeting to standardize the inspection method for measuring mercury content at the Skikda port, in Algeria, as there remains a difference in results between those taken at Skikda load port and the discharge port. The limit on mercury is 1 ppb.

The issue of nitrogen content is also up for discussion. Currently there is no limit on nitrogen in the OSN specifications, but sellers are to test and report nitrogen results when requested by buyers.

Due to expectations of more US naphtha -- which is often high in nitrogen content -- flowing into Japan in future, end-users would like to bring up this issue.

Naphtha rich in nitrogen causes the production of off-spec ethylene, as ammonia is generated in the pyrolysis of high nitrogen naphtha, which may leak to the ethylene distillation unit.

The meeting will also review and clarify some parameters of ship-to-ship transfers, and the trial on US commercial storage tank naphtha, which were added to the 2017 OSN contract.

Japanese end-users are proposing that co-mingling of product is permitted only if it is strictly necessary and limited to one tank in the vessel.

Previously, the clause was "co-mingling of any product or cargo is permitted only if it is strictly necessary and kept to a minimum," without defining "minimum."

For US commercial storage tank naphtha, they are advocating for certificates of quality on samples of each and every shore tank, in addition to the COQ on the composite sample that is already in the contract.

Once the trial is complete, end-users would like a meeting to share the results of the trial.

To date, no US naphtha from commercial storage tank has been put into the trial.

The group will also review the impact of the changes made in the 2017 OSN contract -- such as the addition of a 3 ppm carbon disulfide limit on arbitrage barrels and cargoes from India's Sikka and Vadinar ports; a mercury limit of 1 ppb on naphtha from Skikda; and seek to understand issues hampering US naphtha from independent storage tanks and STS cargoes from being put into the OSN chain.

Meeting panelists this year include representatives from 10 companies ranging from Japanese and South Korean end-users and trading houses, to oil majors Total and Shell, and Western trading house Glencore.

Andrew Wilding from Asdem will be chairing the meeting. Asdem Asia is a consultancy that provides legal and arbitration services for the Asian naphtha industry, including the administration of the OSN contract.
 
 
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