With the exception of South Africa and some North African countries where Group II has entered into automotive lubricants, the penetration of Group II is still limited in certain countries, said Alistair Meyer, area general manager for Nynas-Middle East and Africa. In a presentation at the ICIS Africa Base Oils and Lubricants Conference in Dar es Salaam, Tanzania, he noted that there have been numerous debates about the factors that will drive a shift to Group II base oils on the continent.

Emmanuel Ekpenyong, head of lubricants for HOGL Energy Ltd. in Lagos, Nigeria, emphasized that the gradual extinction of Group I oils is a critical factor that will drive a shift to Group II in Africa. Meyer added that regulatory and performance factors are driving the penetration of Group II and III oils into commercial and consumer automotive lubricants, at the expense of Group I oils.

However, John Erinne, chief executive officer of Matrix-Petrochem in Lagos, told LubesnGreases that he does not anticipate a dramatic shift from Group I to Group II. The shift would be very, very gradual. There are a few specialized demands for synthetics, but I dont see it growing very rapidly. It is still going to be a small niche market.

Jonathan Njine, managing director for Lubesoil in Nairobi, Kenya, related that though there is an assumption that the price of Group II is close to Group I, the price is still higher. He said the shift from Group I to Group II will ideally be driven by legislation, but added that Africa does not have any regulations to drive the market in that direction.

While he allowed that the presence of more modern vehicles in the market will drive the shift to Group II, he added that the situation in East Africa does not encourage the move. For instance, he explained that the East African market allows importation of reconditioned vehicles, most of which are more than seven years old. Therefore, the stringent requirements that apply to modern cars are not big considerations in the market. If you take the percentage of those buying reconditioned cars and those buying new cars, the numbers dont justify us moving to Group II, said Njine.

Meyer added that while industrial lubricants account for less than 30 percent of the total Africa lubricant market, which is dominated by the petroleum, mining and agriculture sectors. Hydraulic fluids represent the largest product category, and he noted that increased mechanization in the agricultural sector is expected to boost demand for these lubricants.

OEMs as Customers & Suppliers

In his presentation, John Anderson, product manager, automotive OEM for Fuchs Lubricants South Africa, explained that with the introduction of service plans, original equipment manufacturers have become customers as well as lube suppliers. OEM service plans now require the purchase of genuine oils for a minimum of 5 years, he said, emphasizing that lube marketers must innovate or get squeezed out by OEMs.

The choice of lubricant has been taken away from the customer, and individual workshops now have very little say over lubricant use, said Anderson. Propping up high margins with clever marketing and workshop investments is no longer effective, nor are traditional marketing methods.

For his part, Taiye Williams, managing director for Lubcon International, agreed that OEM warranties are driving a shift towards higher grade oils. OEMs that are coming into Nigeria and have their assembly plant here are going to be big drivers of a shift to Group II, he said. OEM warranty requirements now specify the type of oil to be used in their vehicles.

HOGLs Ekpenyong supported the conclusion that OEM warranty service is forcing a shift to higher grade oils. More than 90 percent of new vehicles are maintained, at least for the first 4 or 5 years, by the authorized service centers that typically buy premium grade OEM-specified lubricants. The service centers need to maintain the warranty on these expensive vehicles and would not want to void it by using a nonapproved oil, he said.

Samer Akram, director-operations for Unichem Services Ltd. in South Africa, said OEMs are a big factor in driving the adoption of Group II in Africa. The OEMs will influence any shifts to higher quality base stocks, Akram asserted.

Making the Shift

According to Nynas Meyer, monogrades dominate the heavy-duty motor oil segment in Africa due to the perception that thicker oils perform better in hot and dusty conditions. The use of high-quality lubricants is limited to imported cars, with the market predominantly following obsolete specifications.

However, Chevrons Base Oil Product Manager – Asia Pacific, Wai-Fong Chen, noted that heavy-duty engine oils are likely to shift to Group II. A lot of new trucks are coming into this part of the world, and the OEMs require API CI-4 quality. She allowed that the passenger car segment consists of a lot of old cars that may still use 20Ws.

Unichems Akram said that the shift to Group II could be substantial because more cars are being produced and assembled locally. Also, increased spending on infrastructure projects could lead to more demand for improved lubricants.

HOGLs Ekpenyong agreed that increased sales of new vehicles in Africa would result in a gradual compliance with OEM lubricant specifications. This will help promote the shift to Group II base oils. It is also hoped that the cost for Group II base oils, which is a prime concern, will drop in the long run as the market gets used to these oils, he said.

Both Lubesoils Njine and Nynas Meyer stated that future legislation could be a major driver for a shift to Group II oils. At present, much of Africa has no emissions regulations or fuel efficiency standards. As countries adopt stricter regulations, older less efficient vehicles will be forced off the road in favor of vehicles requiring high-quality oils.

How Soon?

The question yet to be answered is: When will sub-Saharan Africa see a significant shift to Group II oils? Njine said it is difficult to put a timeline on the move because legislation needs to change. I see the entry of Group II coming from the smaller players for the time being. I know some who are already using Group II in their minimum multigrade product market. And they are moving to the upper echelon of the market with Group II oils.

Chevrons Chen said she is not sure whether Group I will be phased out completely in Africa because certain industrial applications will still require it. However, she noted that Group II will definitely flow from South Africa to the rest of Africa, but with the proviso that the West African market is a bit complex.

Forecasting the future of Group II in Africa, Meyer concluded that Group I availability issues and changes in price dynamics may accelerate the penetration of Group II in Africa.

BPR Application Costs

Registration under the Biocidal Products Regulation can be a costly proposition.

Central Registration by ECHA

Registration – 80,000, plus 10,000 annual fee

Product Family – 150,000, plus 20,000 annual fee

Registration Changes

Major changes – Up to 40,000

Minor changes – Up to 15,000

Administration fees – Up to 5,000

In addition to these costs, add a same product cost and a cost for a letter of access. Both charges are 5,000 each.

Country Registrations

Cost could vary depending on the country, according to Falk. For example, central registration in Austria costs 18,000. Also, there is a discount for small and medium-size enterprises that could vary from 10 percent up to 30 percent. In addition, cost for registration by mutual recognition varies depending on targeted countries.

The applicants should expect less cost if they seek recognition in 12 or more countries. In this case, ECHA charges 700 for the paperwork. For EU-wide registration, expected cost per product/application might be up to 250,000, Falk said.