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OSN contract puts restrictions on Egyptian naphtha
11/2/2020 12:00:00 AM

London-based consultancy firm for the oil industry Asdem has made changes to the benchmark open specification naphtha (OSN) 2017 contract relating to cargoes from Egypt, which may potentially affect the flow of Egyptian naphtha to Asia-Pacific.
Asdem, which chairs the annual OSN meeting, decided to amend and include new clauses in the contract following feedback from market and industry participants on the arrival of off-specification naphtha cargoes from Egypt, which could potentially cause damage to refinery units.
The contract, a regional standard, also forms the basis of Argus' assessment of the Asia-Pacific naphtha market.
The first change temporarily removes naphtha cargoes loading from Egypt from the excepted product specification clause in the OSN 2017 contract. This change will affect first-half December delivery cargoes from Egypt and remain in place until the next OSN meeting. Naphtha cargoes from countries that fall under the excepted product specification list are exempted from stricter specifications set out in clause 2(1)(A) of the contract, including a maximum chlorine content of 1ppm for open specification naphtha trading.
The second change adds a fourth clause to additional specification requirements, which states that sellers must make sure that cargoes loading from Egypt have a maximum 1ppm chlorine content.
The last amendment requires composite samples from naphtha cargoes loading from Egypt to be tested to ensure compliance with OSN specifications, with this change to also remain in place until the next OSN meeting.
These changes could lend support to the Asia-Pacific naphtha market as Egyptian cargoes are under scrutiny and may be removed from the OSN chain, traders said, although the amount of Egyptian naphtha that flow to Asia-Pacific, mostly to Japan, is minimal.
Source: Argus