A start-up refiner sees that as an opportunity and aims to fill the gap. Sichuan Zhonghai Jinxiang, which was founded in April 2014 in Luzhou, Sichuan, is building the regions first sizable facility that refines base stocks and produces lubes.

We want to be the supplier of high quality industrial lubes to our local manufacturing industry, Liang Hong, a project manager at Jinxiang, told Lube Report Asia.

Jinxiang started the construction about a year ago, and is currently testing the facility, aiming to start the operation in early 2016, Liang said.

Jinxiang built its facility next to a local refinery of China Offshore Bitumen, a division of China National Offshore Oil Co. (CNOOC), and will buy distillate oils from COB to use as its feedstock.

We use distillated oils from asphalt because they have less impurities and have the ideal viscosity for our final products, Liang said, referring to the finished lubes the blending facility will produce – mainly transmission oils, rubber process oils and rubber plasticizer. There will be a small amount of highly refined white oil to supply cosmetics and food manufacturers as well.

While Liang declined to disclose Jinxiangs additives suppliers, he said they will be foreign companies to ensure our lube quality.

Liang also said Jinxiang has no interest in supplying automotive engine oils.

The engine oil sector in China is oversupplied, so the profits are very thin, he said. Also, a car running 10,000 kilometers only consumes maybe four liters of lubes, so the quantity is too small for us anyway.

Jinxiang aims to produce 150,000 tons of lubes the first year. At full capacity, the company can produce 200,000 tons, Liang added.

Im confident that we will get enough orders, he said. Initially we want to focus on Southwest China only. In the future we probably will explore opportunities in other areas.