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June 22, 2018

Volume 7 Issue 3

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Asia Flexes its Base Oil Muscle

Over the last 10 years, the world’s refiners splashed out handsomely to build, expand and upgrade their base oil units, and nowhere is this more evident than Asia-Pacific. Thanks in no small part to the region’s avid pursuit of both quantity and quality, global base oil capacity now stands at roughly 57.3 million metric tons per year (1.12 million barrels/day), according to the new “2018 Global Guide to Base Oil Refining” from Lubes’n’Greases.

While 57.3 million tons represents only a mild uptick from 2017’s tally of 55.6 million tons, it’s a global high-water mark and stands fully 21 percent higher than in 2008.

Impressive as that sounds, the nations of Asia-Pacific have set an even hotter pace, and enlarged their base oil footprint by 63 percent over the past decade. From just 289,000 barrels a day of base oil refining capacity in 2008, the region today holds over 470,000 b/d (24 million t/y).

As the 2018 guide confirms, Asia-Pacific now hosts a hefty 42 percent of global base oil supply and has three more major projects under way that will soon add to that lead: two in China and one in Singapore.

In China, Hainan Handi is building a new plant in Hainan that will make 16,000 barrels a day of API Group II and Group III base stocks, the new guide shows. Also expected soon is Hengli Petrochemical’s new 13,600 b/d Group II/III plant in Dalian. In Singapore, meanwhile, ExxonMobil is expanding its 31,000 b/d Jurong refinery by what Lubes’n’Greases estimates will be another 6,000 b/d, all Group II. Its new unit is due to stream in 2019.

The 2018 Guide to Global Base Oil Refining is a colorful 80-by-66 centimeter wall chart displaying the locations and ownership of more than 160 mineral base oil refineries and rerefineries around the world as of early May. All listed plants are color-coded by region and keyed to a locator map that makes it easy to see where capacity is concentrated or lacking. Published each June, the Guide shows each plant’s ability to make Group I, II, III and naphthenic base stocks. All capacities are shown in barrels per day.

China, it makes clear, lays claim to 16 percent of the world’s base oil capacity, versus 9 percent in 2008 and 12 percent in 2013. In just the past 12 months, the country welcomed new capacity at four sites:

  • Maoming Haihe Chemical opened with 3,800 b/d of Group I;
  • Panjin Northern Asphalt, a subsidiary of industrial giant Norinco, added almost 6,000 b/d of naphthenics capacity;
  • Shandong Qingyuan boosted its Group II capacity by 50 percent, notching a total of 12,000 b/d;
  • Xintai Petrochemical started up a unit with 3,000 b/d of Group II capacity.

Quality is the other big winner in China, buoyed by a decade of investment by state oil companies and private enterprises alike. The lion’s share of the country’s capacity is now Group II and III, which together hold 55 percent of the market. Group I accounts for a scant one-quarter of the nameplate capacity, shrunken from 64 percent in 2008. Naphthenic capacity has also bloomed over the decade, nearly doubling in volume from 20,650 b/d in 2008 to 37,500 b/d today; a clear measure of China’s need for industrial lubricants, greases and tire, electrical and process oils.

Asia’s next-largest base oil producer is South Korea, which holds 120,800 barrels of daily capacity or about 11 percent of global supply. Japan, South Asia, Australia and other Pacific countries together share another 15 percent of the world’s capacity.

By way of comparison, North America possesses 25 percent of global base oil manufacturing, and the nations of Europe have 19 percent. The Middle East and Africa have a 10 percent share, and South America just 3 percent, pointed out Michele Persaud, editor of the Global Guide.

“Except for South America, every region has seen major refinery projects come to fruition in the past 10 years,” Persaud reported. The most recent of these was the long overdue opening earlier this year of Luberef’s 14,200 b/d Group II plant in Yanbu’al Bahr, Saudi Arabia. “And the next big slug of capacity will come not in Asia but in Rotterdam, Netherlands,” she added, “where ExxonMobil’s massive new Group II facility is expected to begin commissioning before year end.” Lubes’n’Greases estimates it will have 20,000 b/d.

In all, the Guide shows 15 projects both small and large that are due online between now and 2021, totaling 86,000 b/d of capacity, Persaud noted.

“Many companies contribute their plant data for each year’s guide, and we work closely with Pathmaster Marketing Ltd. in the United Kingdom and other experts around the world to keep it up to date,” Persaud commented. “We also rely on Lube Report Asia’s network of reporters on the ground in Asia to check capacity data, for the most accurate information.”

Along with this yearly Global Guide to Base Oil Refining, Lubes’n’Greases each September publishes the “Nonconventional Base Stocks Guide” that maps out the locations, owners and capacities of plants making the seven most popular types of synthetic base stocks. A third Guide focuses on conventional and synthetic base stock production throughout Europe, the Middle East and Africa.

Copies of the 2018 Guide to Global Base Oil Refining were mailed this month to all of the magazine’s print subscribers along with their June edition; copies were also mailed to Lubes’n’Greases digital subscribers.

“Additionally, in response to many reader requests, we are also making the data set for the 2018 global guide available for the first time as an Excel spreadsheet,” announced Howard Briskin, publisher of Lubes’n’Greases. “This will be invaluable for those who want to analyze the information on a global basis, whether by ownership, by region or by base oil type.”

To order the global guide as a print copy or digital PDF, or in Excel format, visit http://pubs.lubesngreases.com/base-stock-guides/