Platts - The National Iranian Oil Co. has cut South Pars condensate term allocations for the second quarter by 25% from Q1 to around 350,000 b/d, a NIOC official said Tuesday.�

This follows increased use of the condensate as a feedstock for its Persian Gulf Star refinery, the official said, adding: "Because of the second phase of Persian Gulf Star, we have to deduct from our exports."

Three South Pars condensate term buyers said that their Q2 term allocations had been cut, though they declined to specify by how much.

Iran started up the second phase of its 360,000 b/d Persian Gulf Star refinery in mid-February, adding 120,000 b/d of refining capacity to the existing 120,000 b/d from phase one.

The refinery uses South Pars condensate as its main feedstock.

South Pars condensate prices for Q2 term cargoes were concluded at higher differentials compared with Q1.

Q2 term negotiations were heard done at a premium of around $3.25-$3.40/b to Platts front-month Dubai crude assessments on an FOB basis, the three term buyers said.

This was up from a premium of around $2.50/b to Platts Dubai crude assessments for Q1.

"Slightly higher than $3/b. Not higher than $3.50/b," a trading manager at a Northeast Asian refiner said, referring to the premium.

Another Northeast Asian refinery source put the premium at around mid-$3/b.

The cut in term allocations for Q2 extends already sharp declines in South Pars condensate exports year to date.

Exports of Iranian crude to South Korea, a major buyer of South Pars condensate, tumbled by 32.1% year on year in February to 9.088 million barrels, latest data from the Korea National Oil Corp. showed.

This marks the fourth consecutive decline since November last year when imports of the condensate dropped 26.8% year on year to 10.37 million barrels.