The largest such facility in Europe, the plant was mechanically complete in June and ramped up to commercial production in September. It is capable of producing 13,000 barrels a day (636,000 metric tons/year) of Group II and Group III products.

There arent that many places in Europe that have this kind of facility to refine right-quality feedstock at such scales, said Alan Bell, SK Lubricants Europes head of sales. This plant uses hydrocracking technology for a secure supply of on-spec Group III base oils.

Nestes refinery in Porvoo, Finland, with 5,100 b/d of capacity, was Europes largest Group III facility before Cartagena opened for business. The rest – ExxonMobil in Fawley, U.K., and Gravenchon, France; Total at Gonfreville, France; Lukoil in Volgograd, Russia; and Rafinerija ulja Modricas facility in Bosnia & Herzegovina, and a few others – are smaller yet, with a combined 6,000 b/d.

LubesnGreases sat down on Sept. 18 with Bell and other SK and Repsol officials, to hear how the project was born and what the future promises.

First Shipments

Owned 70/30 by SK and Repsol, respectively, the joint venture operating the plant is Iberian Lubricants & Base Oils Co., Ilboc for short. Proud Ilboc officials introduced the public to their E250 million baby with a refinery tour on Sept. 16, and on Oct. 1 sold their first shipments of base stock under SKs flagship Yubase brand.

The plant has one lube train with catalytic dewaxing, vacuum stripping and hydrofinishing units that use SKs UCO technology. It can deliver 3 centiStoke as well as 4, 6 and 8 cSt cuts. Maximum output is around 3,700 b/d (186,000 t/y) of Group II heavy base oil and 9,200 b/d (450,000 t/y) of Group III base oils.

Repsol already had a 130,000 t/y Group I base oil plant at Cartagena, so as of now, Repsol is the only company in Europe that can simultaneously offer Group I, Group II and Group III base oils, Bell said.

It means for us a unique possibility to stand [out] better in the base oil business in the future, said Antonio G. Snchez Snchez, director of Repsols lubricants and specialized products division.

Cartagenas Group III base oil supply will replace the volumes SK was shipping to Europe from South Korea. This hand-off also leaves it free to modify one of its three lube trains in Ulsan, S. Korea, to produce a Group II+ heavy base stock.

We started this modification in 2012 and that gives us an opportunity to offer 500 neutral bright stock, explained Jay Kim, SK Lubricants Europes managing director. Now is a trying period for bright stock, when many Group I base oil plants are closing, and there is some demand for heavy base oils.

Could Be a Surplus

He added, When a new plant appears on the market there always could be a surplus for the time being. On the other hand, we also need the potential to increase capacities as market demand increases. We need this flexibility for sudden demand increase – it is a lesson from 2010 and 2011, when we failed to answer the market demand as we suffered project postponements after the 2007 and 2008 global financial recession.

The Cartagena plant primarily is designed for supply security of the European market, as the demand for synthetic products is expected to grow by 1.2 million tons between 2013 and 2023, Paul Kerwin, European sales manager for SK Lubricants Europe, told an industry meeting in nearby Alicante, Spain, on Sept. 17.

Europe continues to lead the way for utilization of synthetics, while new motor oil specifications in North America and demand for fuel efficient vehicles in Asia will drive the demand growth for synthetics elsewhere, he added, citing data from Kline & Co.

More than a dozen other new Group III plants have been announced, but the strategy behind the Ilboc venture assumes that not all of these will come to fruition, Kerwin told the ACI European Base Oils and Lubricants Summit on Sept. 17. And if those plants do come to fruition, they have an approximate yield of 60 percent for the key 4 cSt and 6 cSt grades, primarily used for engine lubricants, Kerwin said.

In his view, tightness of feedstock supply and lack of OEM approvals and base stock interchange make the Group III supply/demand balance less straightforward than it seems. For its part, Cartagena could deliver around 450,000 t/y of 4 and 6 cSt grades, available now.

Sharing Alike

In Cartagena, LubesnGreases heard that Repsols share of the joint ventures volumes, at 30 percent, is equivalent to 210,000 t/y. At least 60 percent of this is meant for the Spanish, Italian and French lubricant markets, according to the Spanish oil major.

SK highlighted the refinerys excellent geographic position, and its auxiliary facilities such as a newly built tank farm, truck filling racks and a jetty for seaborne shipments.

These enable both companies to deliver base oil around the Mediterranean basin and to SKs storage hub in Rotterdam, the Korean refiner said. The combination of good European logistics and infrastructure gives opportunity for secure supply in southern and northern Europe, as well as proximity to the North American markets. These are decisive factors for creation of this j.v., Jay Kim said.

Looking back at the plants origins, Bell observed that Group III production peaked in Europe during 2000s, even as OEMs were looking for more robust products that could increase lubricant drain intervals, assure engine life and cut vehicle emissions. We have this huge refining facility in Ulsan where we make our products that are in demand globally, and at some point we realized that we shipped large vessels to Europe twice per month, he said.

As lubricant blenders in Europe, North America and China started to request security of supply and base stocks that had global approvals, we moved with the idea to build another Group III base oil plant elsewhere. We werent satisfied with the idea to rely only on one plant, Bell recalled. We thought, If something goes wrong, what would we do? SK Lubricants had opened one joint venture plant with Pertamina in Dumai, Indonesia, but it produces a slightly different kind of product, higher quality Group III+ base oils.

Natural Allies

The alliance with Repsol happened very naturally, and the Spanish officials boast of it as a multicultural venture. After long discussions we realized that Repsol has the muscle and SK Lubricants has the brain. We have the field expertise and they have the technology. Both companies demonstrated commitment to be in a business that gives good quality type of products. Everything fitted on either side, Repsols Snchez said.

Seeing demand grow for higher quality lubricants for engines meeting Euro V and Euro VI emission standards, both companies reached a decision to sign an agreement for the plants construction in late 2011.

Repsol is not turning its back on Group I, however. By 2017 it plans to start to produce hydrogenated Group I base oils in Cartagena. This means improving our facility there to produce better quality Group I base oil, Snchez noted.

The company also has invested to improve its 110,000 t/y Group I base oil plant at its refinery in Puertollano, near Madrid. After the modernization, the capacity was reduced to 80,000 t/y. In April we erected a new vacuum tower there, Snchez said. It was a step to increase the efficiency by cutting the plant capacity, a volume mostly consumed by our blending plant there.

Puertollano also is home to a 120,000 t/y blending plant. The company holds around a 20 percent share of the 350,000 t/y Spanish finished lubricant market, according to Antonio Portela Estavez, Repsols director for lubricants, asphalts and specialties. Besides its Repsol-brand finished products, the company also offers extender oils, low-toxicity paraffinic oils and paraffin waxes.

SK Lubricants is part of SK Holdings, South Koreas largest oil refiner and its third biggest conglomerate by total assets. Cartagenas new plant brought SK Lubricants global Group III nameplate capacity to 2.7 million t/y. It makes us a number one global supplier, Bell proclaimed.

With Group III demand forecast to see stable growth, and SK aiming for maximum availability in most of the countries it exports to, we are certainly looking for an expansion, but in another region, he confirmed. There always has to be a plan B.