The company will start exporting this week, according to Park. We are planning to export a total of 70 percent of production quantity, except our own use and domestic sales, she said, adding that their main market for export will be the Asia Pacific region, mainly China. But we are considering other regions outside AP [Asia Pacific] as our potential markets as well.

Originally formed in 1966, GS Caltex is a 50-50 joint venture of South Korean company GS Holdings and Chevron. Caltex was created in 1936 as an overseas joint venture between Chevron and Texaco, and was absorbed when Chevron acquired Texaco in 2001. In 2004, GS Holdings was spun off from LG Corp.

The large-scale project in Yeosu took 23 months from detail design to mechanical completion, which the company said was about 10 months ahead of the industry average of 33 months. To produce its API Group II and III base oils, the plant uses Chevrons trademarked Isodewaxing catalyst, which reshapes wax molecules into high-quality base oil molecules rather than breaking them down into by-products as is done in conventional dewaxing.

Mike Wirth, Chevrons global downstream executive vice president, lauded the projects timely completion during his companys Nov. 2 quarterly earnings conference call. During the quarter, our South Korean joint venture refinery completed construction of its upgrade project ahead of schedule and on budget, Worth said.

Earlier this year GS Caltex began a phased commissioning of the projects facilities, starting with utility process mechanical completion April 23. Hydrocracker and lube oil plant mechanical completion occurred Aug. 31. Park said the start-up dates for various components included Aug. 28 for the vacuum distillation unit, Sept. 27 for the hydrogen manufacturing plant, Oct. 15 for the hydrocracker and sulfur recovery unit, and Oct. 29 for the lube oil plant.

South Korea is already home to two huge base oil refineries: S-Oils Onsan refinery, with 15,000 b/d of API Group II and 9,000 b/d of Group III capacity; and SK Energys Ulsan refinery, which has 5,000 b/d of Group II capacity and 16,000 b/d of Group III capacity.

Analysts said the next year will bring a hefty amount of new higher-quality base oils into a global market that is already oversupplied.

Geeta Agashe, director of Kline and Co.s Petroleum and Energy Practice, said Klines Global Lubricant Basestocks 2006-2008 database – which currently excludes the GS Caltex volumes – shows the Asia Pacific region is now in a 6,000 b/d oversupply position for Group II base oils, a surplus it expects will grow to 8,000 b/d in 2010. For Group III base oils, Klines data shows the region has a 38,000 b/d oversupply this year, and forecasts a 70,000 b/d overhang in 2010.

Agashe, who is based in Little Falls, N.J., noted that GS Caltex is also active in the finished lubes business, which could be a key factor. What percent of these volumes could be consumed internally and what percent will be sold in the marketplace will have a lot of bearing on the pricing equation, Agashe explained. Also, this is a good way for GS Caltex to take their fuel hydrocracker bottoms and with comparatively lower investment, convert it into higher-return base stocks. Its all about incremental economics.

She said Kline does not expect any significant technical demand for Group III to emerge in the Asia Pacific region over the next five to 10 years. So, most of these volumes will be consumed internally or compete with merchant suppliers like SK, S-Oil, Fortum and others, Agashe said.

Stephen Ames, of SBA Consulting in Pepper Pike, Ohio, said he expects the GS Caltex Group II base oils will impact the market right away, as will the Group III output when it streams.

I understand the Group III will start up at the rate of about 200,000 [metric] tons per year towards the end of the first quarter of next year, Ames said. That will be the first new Group III to hit the marketplace, alleviating the tight supplies that currently exist. That will have a very beneficial impact for the buyers – for the competition who are sellers, it may have some negative impact. Although I dont think if they did come out at the rate of 200,000 tons that youd have much of a negative impact.

Later in 2008 there may be more cumulative impact, he added, as the Pertamina-SK refinery in Dumai, Indonesia, begins producing an expected 7,500 b/d of Group III, and the Petronas base oil plant in Melaka, Malaysia adds 5,500 b/d of Group III to the mix. That will provide some big cushion in the supply of Group III base oils, he said.

Ames said the demand for higher-quality base oils in China is gradually ramping up. Their new automobiles are requiring the same type of lubricants as cars in Europe and the U.S., he said. Their demand is growing certainly, as is rest of the region. Can it all be absorbed there? [Its a] question mark.

Ames believes GS Caltex plans to market some of its Group II barrels in regions other than Asia Pacific. So youre likely to see some of that product hit other markets, he said. Whether thats Europe, Latin America or North America, I dont know. That will take an already-surplus Group I/Group II market and make it a little more surplus.

According to the Kixx Lubo web site, the new brand name is a combination of the GS Caltex family brand Kixx and lube base oil. The Kixx name originates from kick, to describe speed, strength and dynamism.