The new base oil unit lies within Bahrain Petroleum Co.s existing refinery in Sitrah, on the east coast of Bahrain, and it will utilize the existing infrastructure. Feedstock will be provided by the hydrocracker unit based in the refinery. The good availability of the high-quality feed for base oil production is one of the main advantages of the Middle East location. Bapco will operate the unit, while Neste Oil will market all of its production.

Neste Oil and Bapco agreed on building this high-quality lubricant base oils plant in 2008, and set a tight schedule for the engineering and construction of the $430 million project. The construction work has been proceeding on-schedule and on-budget. The mechanical completion, slated for February 2011, allows starting the pre-commissioning before the turn-around of the main refinery. The first shipments from the new production are expected to depart this fall.

In the present global situation, this seems to be the only Group III project facing completion in time, which makes us all involved very proud, says Juha Wallius from Neste Oil market development.

Headquartered in Finland, Neste Oil is one of the worlds leading producers and marketers of VHVI base oils, which it markets under the registered brand Nexbase. The new plant will further extend the global reach of the companys business in this field.

Vision: Cleaner Traffic

This investment is well in line with Neste Oils strategy of refining the future for cleaner traffic. Sulfur-free, high-performance base oils support this goal by helping to reduce fuel consumption and emissions. The company committed itself to adopting advanced technologies decades ago, and has a long track record in developing fuel components and base oils for lower-emissions traffic. It was the first company to offer unleaded and sulfur-free fuels, as well as bio fuels, for the Finnish market – well ahead of the actual demand from the market or European legislators. Today it produces clean diesel fuel from renewables, and is researching a range of new raw materials.

Its most important investment projects are all designed to increase the production capacity of renewable diesel and base oils. In 2010, Neste Oil started up the worlds largest and most advanced renewable diesel plant in Singapore, and a similar facility is expected to start up mid 2011 in Rotterdam. The third project is the new base oil plant in Bahrain.

The Bahrain plant is based on the same process technology Neste Oil has used since 1997 at its first base oil plant in Porvoo, Finland, and includes the companys proprietary base oil distillation technology. The new production is designed to meet the same manufacturing specifications and consistent product quality as that from Finland. This is achieved by skilled operation of the process units, regardless of the crude oil selection at the refinery. The product quality in Bahrain will be qualified into the same base stock slate as the material made in Porvoo, according to industry standards.

The main base oil grades coming out of the unit in Bahrain are 4.3 centiStoke and 8 cSt products; their viscosity index is between 121 and 130. However, the unit is flexible and it is possible to produce other grades too, according to demand.

The current production unit in Finland, for example, produces 250,000 t/y of high-quality Nexbase base oils which range from 2 cSt (ISO Viscosity Grade 7) to 8 cSt (ISO VG46). The 2 cSt and 3 cSt light grades have excellent cold-temperature properties and are used largely in automotive powertrain applications. The 4.3 and 5 cSt base stocks are especially suitable for 0W and 5W passenger car engine oil formulations. The heavier 6 and 8 cSt grades are a good base for heavy-duty diesel engine oils and for industrial applications, such as high-performance turbine oils, hydraulic fluids and gear oils.

Additive Links

In addition to supplying base stocks, Neste Oil is investing in development of engine oil formulations, in cooperation with the major additive suppliers. This brings up-to-date formulations to customers, meeting the latest specifications of industry bodies like ACEA and API and also a broad range of approvals from vehicle original equipment manufacturers (OEMs).

For North America we are currently completing SAE 0W-20, 5W-20, 5W-30 and 10W-30 ILSAC GF-5 oils, and GM Dexos1 formulations will be made available. We also have completed the first API CJ-4 heavy-duty engine oil development program for an SAE 10W-40 grade, points out Fredrik Nissfolk of Neste Oil market development.

The life of an European lubricant formulator is not easy, he adds. The challenge comes from the fact that there are numerous different OEM specifications on top of the ACEA requirements, which together set the strict quality limits for an engine oil of a certain type. And as we know, getting a car manufacturers approval takes time and requires extensive testing, both in laboratory and in the field. The United States has more harmonized specifications, but North American OEMs also are starting to demand oil quality above the general ILSAC/API requirements. On the passenger car engine oil side, General Motors Dexos specification is one recent example.

Fuel economy is now gaining renewed attention from European vehicle manufacturers. The reason is the European Union legislation that will force OEMs to pay fines for excess CO2 emissions. This mandate will lead to OEMs specifying lighter viscosity grades for engine oils, in order to reduce fuel consumption and therefore CO2 output.

Recently European OEMs started to accept oils with high temperature, high shear viscosity (HTHS) lower than 3.5 mPa.s. The pressure on improving fuel economy is huge, as the CO2 fines could become quite significant.

On the other hand, ILSAC engine oil grades for years have been designed to demonstrate improved fuel economy. In the United States, the federal Corporate Average Fuel Economy legislation is pushing the OEMs in a similar manner as the CO2 fines in Europe.

Improved base stock quality is a key enabler for lowering the viscosity and SAPS content of engine oils, and will increase the demand for Group III base oils in general. From a market development point of view, the big question is what will happen outside Europe. Rapidly growing economies – like China – will have a huge impact on demand. It also seems that European OEMs will have a growing influence on markets in North America and Asia Pacific.

Reaching for Global Markets

With the new capacity addition in Bahrain, Neste Oil aims for ambitious growth, enabling it to serve its customers better in the global market. A number of initiatives were carried out in 2010 to expand the base oil customer base and strengthen sales and distribution channels, as well as enhance customer service in the regions where the high-quality base oil consumption is growing.

Our main market areas are Europe and the Americas but we expect to grow our share also in Asia, not to mention the Middle East, which has great growth potential and the advantage of our new location. And naturally our supply chain will stay flexible for any changes in the market, to meet the customer requirements, states Alejandra Noren, head of sales at Neste Oil. We are, for example, expanding our Houston terminal this fall to accommodate Bahrain production, and adding a new terminal in Singapore in 2012.

With our new capacity increase in the Middle East and the local inventories, we will be able to support the growth of our customers and add to our global presence in the selected markets, she adds.

Soon after the joint venture in Bahrain comes on stream this year, the company will begin another capacity increase in the Middle East. A joint project with Takreer in Ruwais, Abu Dhabi, will bring an additional 500,000 t/y (10,000 b/d) of Nexbase to the market in 2013. This will bring the total Group III base oil capacity of Neste Oil to over a million tons annually.