Motiva Enterprises announced last week an agreement to market, sell and distribute in the North America API Group III base stocks supplied from South Korea by S-Oil Corp.
The deal increases the level of cooperation between affiliates of Saudi Aramco, the parent company of Motiva and majority owner of S-Oil. It also constitutes a significant realignment of the North American Group III market as S-Oil’s products have been distributed by Phillips66.
Saudi Aramco has been gradually increasing its coordination of base oil assets since 2019 when it brought them together under the Aramco Base Oils Global Alliance in 2019. The state-owned Saudi oil giant owns 63.4% of S-Oil and 70% of Saudi refiner Luberef.
“The agreement solidifies Motiva as the face of Aramco base oils sales in the Americas, advancing a brand strategy that all Aramco-produced base oils are marketed exclusively by affiliates,” Motiva Base Oils Director Colleen Murphy-Smith said in a June 17 news release. “The deal enhances Motiva’s existing product portfolio and allows us to offer our customers even greater value.”
“It only makes sense given what Aramco has been trying to do in terms of coordinating its base oil businesses,” said an official with another base oil supplier, who asked not to be identified. “I’m only surprised it didn’t happen sooner.”
The United States is one of the world’s largest importers of Group III oils, being one of the two largest finished lubricant markets – along with China – but producing little of that grade. Chevron has capacity to make 1,000 barrels per day at its base oil plant in Richmond, California, and Calumet Specialty Products Partners has capacity to make 400 b/d at its Shreveport, Louisiana, refinery. Motiva makes a relatively small amount at its giant Port Arthur plant but does not say how much.
S-Oil is one of the world’s largest merchant suppliers of Group II and III oils and has been one of the largest Group III exporters to the U.S., along with SK Lubricants, Royal Dutch Shell and HollyFrontier. Motiva declined to specify the volume of Group III that S-Oil supplies to the U.S., saying only that it exceeds the amount made at Port Arthur.
S-Oil’s contract with Phillips66 originated a decade ago with predecessor ConocoPhillips. Although Phillips66 has sold some of S-Oil’s imported Group III, market sources say the Houston-based company has purchased the larger portion of that quantity to use in its own finished lubricant blending operations.
When considering its base oil assets collectively, Aramco is one of the world’s largest base oil suppliers. Motiva’s Port Arthur plant has capacity to make 40,300 b/d of mostly Group II base stocks. S-Oil operates a plant in Onsan, South Korea, with capacity to make 2,900 b/d of Group I, 23,000 b/d of Group II and 16,900 b/d of Group III. Luberef operates plants in Yanbu’al Bahr and Jeddah, Saudi Arabia, with combined capacity to make 8,600 b/d of Group I and 14,200 b/d of Group II.
Motiva said it will continue making Group III in Port Arthur even after it starts to market Group III from South Korea. The Group III products made by the locations have different specifications but are both marketed under the aramcoUltra brand name.