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December 20, 2016

Volume 7 Issue 7

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CNOOC Opens Base Oil Plant

China National Offshore Oil Corp. has begun making base stocks at its fuels and petrochemical refinery in Taizhou, China. The new plant has capacity to make 400,000 metric tons per year of paraffinic API Group II-plus oils and 200,000 t/y of naphthenic oils.

CNOOC said it also plans to build a finished lubricant blending plant at the same site. The projects are part of a strategy to expand is production of value-added oil products, including base stocks and lubricants.

“The Taizhou integrated project, especially these two base oil units, has enhanced lube oil production capacity of CNOOC and also extending CNOOC’s business production line, as well as its value chain,” the company said in an e-mailed response to a reporter’s questions.

CNOOC is China’s third-largest national petroleum company, after PetroChina and Sinopec. From its founding in 1982, CNOOC has focused on offshore exploration and production of crude oil and natural gas, and it has been less involved than PetroChina and Sinopec in fuels refining and production of oil products such as lubricants.

Over time, CNOOC has branched into refining and production of chemicals and oil products such as fertilizer and bitumen, a strategy that gained impetus since 2014 with the crash of crude oil prices. The Taizhou base oil plant is the company’s third, and last year it entered the finished lubricant business, forming a joint venture with Singapore-based United Oil to blend products marketed under the co-owned Hydro Pure brand.

Officials said the company plans to build a blending plant at Taizhou and that it will use base oils produced there to make premium finished lubricants. They did not disclose a timeline for that project. Currently United Oil blends Hydro Pure lubricants at its factories in Singapore and Indonesia.

The Taizhou base oil plant is part of a ¥10.2 billion (U.S. $1.5 billion) project undertaken in 2012 by subsidiary CNOOC Oil & Gas (Taizhou) Petrochemical Co. to expand the types of chemicals and oil products made at the complex. Base stocks were prominently mentioned, and the list of other new products includes liquefied petroleum gas and fuel oil.

Construction of the broader project was finished in June and base oil production has since ramped up. The paraffinic unit will make base oils that have viscosity index of more than 110 and that fall into six viscosity grades – 2 centiStoke, 4 cSt, 5 cSt, 6 cSt, 8 cSt and 10 cSt. It is also capable of making Group III. The naphthenic unit will make three viscosity grades: 2cSt, 6 cSt and 10cSt. Officials said the company plans to sell some of the output on the open market and to export some of it.

Photo: CNOOC

CNOOC's new base oil plant in Taizhou, China