Shell plans a phased closure of the base oil plants two trains. The spokesperson said the intention is to close train two at the end of 2015. The closure timing for train one is still under discussion, but our expectation is probably early 2016, the spokesperson said.

Stephen B. Ames of SBA Consulting told Lube Report the Pernis base oil plant closure comes as no surprise. It is simply another in the string of 10 European base oil operations that have shuttered since 2010, Ames said. And it will not be the last. With over 3 million tons per annum of new global capacity to stream in the next year or so, and with the continued decline in European lubricants demand in Europe, the tipping point has arrived for European Group I base oil plants.

He noted that at one time, Pernis was key to the Shell lubricants system. A number of changes have or are about to occur that have diminished Pernis importance. With Chevrons new Pascagoula Group II operation nearing start-up, other U.S. Group II producers are looking for new, non-U.S. markets for their production, Ames said. That includes Motiva, the Shell joint venture with Saudi Aramco. No doubt Motiva will become a larger supplier to Shells European operations sans Pernis.

Shell also has unused capacity available at its Pearl GTL plant in Qatar, he pointed out. Without Pernis, it may be that more GTL stocks will find their way into Shells European lubricant supply chain, he said.

According to Ames, the heavy neutral and bright stock produced at Pernis was once key to the formulation of Shell marine lubricants. However, in recent years, Shell has developed Alexia S-40, an SAE 40 cylinder lubricant, that no longer uses bright stock. Moreover, Shell claims it can be blended from all Group II base stocks, presumably 150 and 500N.

Ames noted that Pernis is a large (440,000 b/d) complex refinery that surely can alternatively upgrade the [vacuum gas oil] base oil feed to higher margin clean fuels (gasoline, jet fuel and diesel).

The decision to close the Pernis plant is subject to regulatory approvals from the staff council, Shells spokesperson said. The intended decision includes the closure of the entire base oil complex that consists of two main production units where Shell produces a variety of base oils, waxes and process oils. The intended decision is part of the normal process of change within Shell, adapting our processes and organization to changing markets. Shell will continue to serve its global customers from other lube oil manufacturing complexes and sources, the spokesperson added.

The employment situation at Shell Pernis will not change, the spokesperson noted, because the company can incorporate the 70 base oil production and related maintenance staff at other operational units at the same location.

Shell has a Group I plant in Pulau Bukom, Singapore, with 7,100 b/d Group I capacity and a smaller Group I plant in Buenos Aires, Argentina, with 1,500 b/d capacity. The CPC-Shell joint venture base oil plant in Taiwan has 5,400 b/d Group I capacity.

A Hyundai Oilbank-Shell joint venture base oil plant with 13,000 b/d Group II capacity is under construction in Daesan, South Korea, and could come onstream as early as September this year, according to industry sources.

The Shell-Qatar Petroleum joint venture gas-to-liquids base oil plant in Ras Laffan, Qatar, has 6,000 b/d of Group II and 22,000 b/d of Group III capacity.

Motiva, a Shell-Saudi Aramco joint venture, operates a base oil plant in Port Arthur, Texas, with 40,300 b/d of Group II capacity.

In 2011 Shell ceased refining at its facility in Harburg, Germany, ultimately selling the refinerys Group I base oil plant to Nynas. Also in 2011, Essar Energy bought Shells refinery in Stanlow, United Kingdom, including a base oil plant with 5,060 b/d Group I capacity. Essar shut down the Stanlow plant in 2013. Shell Canada in 2010 closed its Montreal East refinery, which included a 2,700 b/d Group I base oil plant.