Russia’s Novatek might take weeks to restart operations; temporary disruption in naphtha supply
Data from CommoPlast showed spot naphtha traded based on CFR Japan terms gained about 4.5% within January alone as the Red Sea crisis curtailed shipments from Europe.
Russian oil and gas company – Novatek is expected to restart its operations at the Ust-Luga processing complex within weeks following a suspected drone attack that damaged parts of the plant and forced the company to shut down.
According to media reports, the incident caused impairments to two storage tanks and a pumping station. The company had also suspended operations at the Baltic Sea fuel export terminal.
About 5.2 million tons of naphtha are exported to Asia via the port of Ust-Luga each year, of which 2.8 million tons were from Novatek. Within the month of January, the producer exported about 250,000 tons of naphtha to Asia. The production disruption is expected to curb the producer’s ability to supply to Asian buyers in the next several weeks, further exerting upward pressure on the already tight market.
Data from CommoPlast showed spot naphtha traded based on CFR Japan terms gained about 4.5% within January alone as the Red Sea crisis curtailed shipments from Europe. With the absence of Novatek, the Asian naphtha market is expected to climb further moving forward.
Naphtha is the key feedstock in petrochemical production. In Asia, South Korea is the largest naphtha importer, followed by India, and Singapore.