Mangalore Refinery and Petrochemicals Ltd. announced last week that it plans to build a Group III base oil plant at its refinery in southwest India. The plant will have capacity of 250,000 metric tons per year and is scheduled to open in mid-2010.
An official told Lube Report yesterday that the company wants captive base oil supply to support its venture into the lubricant market.
This is part of a strategy to be in finished lubes by 2010, said the official, who spoke on condition that he not be identified. It will assure that we have the base oil we need.
Mangalore Refinery and Petrochemicals is a subsidiary of energy giant Oil and Natural Gas Corp., having been acquired by it in 2003. Both companies already sell fuels at the retail level, but neither currently makes finished lubricants.
Mangalore Refinery and Petrochemicals operates a refinery in the port city of Mangalore, and the base oil plant is part of a broader expansion and upgrade that its board of directors approved Feb. 14. The company has a price tag of 128 billion rupees (U.S. $2.88 billion) on the project, which also includes clean motor fuels and a slate of petrochemicals. According to reports by Indian news organizations last week, the company is undertaking the larger project to raise the value of the refinerys products and to increase overall output.
India currently has four base oil plants. Hindustan Petroleum operates a 6,400-b/d Group I plant in Mumbai, while Chennai Petroleum has a 5,250-b/d facility in its namesake city. An Indian Oil plant in Haldia has capacity of 3,800 b/d, including 2,300 b/d of Group II capacity brought online in 2004. Bharat Oman Refining had scheduled to open a 3,550-b/d Group II plant in Mumbai late last year, but the start-up has been delayed.
The base oil market in Asia has tightened significantly the past two years, and buyers in India – which is a net importer – have had to work harder to secure the supply they need.
Mangalore Refinery and Petrochemicals posted a request for proposals outlining its project. It stated that the light- and medium-viscosity oils produced by the base oil plant will be of Group III quality, while an oil of 500 SUS will be Group II.
The official at Mangalore Refinery and Petrochemicals said the company will likely sell some of its base oils while developing its finished lubricant business but that ultimately it expects to keep most, if not all, of the oil for its own use.