Supplies of Yubase 4 base oil are set to tighten in Europe after Repsol warned customers that it will be unable to supply the API Group III grade through much of the coming months because of production problems at its supplier’s refinery.
In a customer letter seen by Lubes’n’Greases, Repsol said it had been informed of “upcoming production issues” affecting Yubase 4 availability during August, September and November.
The company currently expects Yubase 4 availability to recover during November, subject to a successful restart of the refinery.
“We regret that we are unable to support your requirements on this occasion,” Repsol told customers, adding that it had received no prior visibility of the technical production issue and had only been informed recently.
Repsol produces Group II and Group III base oils through Iberian Lubricants Base Oils Co., a 70-30 joint venture between Repsol and SK Enmove, the majority stakeholder, in Cartagena, Spain.
The refinery is due to undergo a scheduled shutdown, with the limited remaining Yubase 4 stock reserved exclusively for Repsol Lubricants. Repsol said it would continue to supply Yubase 2, Yubase 3 and Yubase 6 during the disruption.
The production problem has been linked by one source to a filtration issue, which is expected to be addressed during the turnaround scheduled to begin next week.
The situation is complicated by the amount of material SK Enmove has already positioned in Europe. According to Ray Masson, a U.K. base oil trader and contributor to Lubes’n’Greases’ weekly EMEA Base Oil Price Report, SK Enmove has built substantial inventories of Group III grades at its Antwerp hub. Those stocks could provide some cover for European customers while refinery production is interrupted, depending on available volumes and allocation, he said.
SK Enmove operates base oil production facilities in South Korea, Spain and Indonesia and markets Yubase internationally. It also this month signed a long-term Group III base oil supply agreement with U.S. refiner HF Sinclair.