SK-Pertamina Plant Slated to Expand


LONDON – SK Lubricants and Pertamina plan to expand their API Group III base oil plant in Dumai, Indonesia, by 50 percent next year. An SK official announced the project at a recent industry conference where he also bucked conventional wisdom by predicting Group III shortages.

Paul Kerwin, European sales manager for SK Lubricants Europe, told the ICIS World Base Oils & Lubricants Conference here on Feb. 20 that the world will see a Group III base oil shortage by 2017, particularly for base oils with automaker approvals for use in fuel efficient engine oils. Kerwins prediction contrasted sharply with the forecasts from such industry experts as Kline & Co. and SBA Consulting, which both predict a massive oversupply of high quality, light viscosity base oils over at least the next five years.

SK expects Group III demand to exceed 6 million tons per year by 2018, while supply will be less than 5.6 million tons. And 90 percent of the demand for Group III is for just 60 percent of capacity, the 4 centiStoke and 6 cSt base oils needed for the highest quality engine oils, Kerwin said.

To meet this anticipated demand growth, SKs joint venture base oil refinery in Dumai will increase its capacity from todays 490,000 tons per year to 740,000 t/y in 2015, Kerwin said. The Dumai plant is 65 percent owned by SK and 35 percent by Indonesias national oil company, Pertamina.

Group III+ is not an ATIEL or API base oil category; rather it is the unofficial term used commercially for base stocks with a viscosity index of 130 or higher.

Dumai will produce more III+, said Kerwin, thanks to its access to a unique, high-wax feedstock. The natural home for this III+ is as an alternative to PAO [polyalphaolefin] 4 [cSt], he noted.

SKs III+ is also a viable alternative to GTL [gas-to-liquid base stocks], Kerwin continued, and no new GTL base oils – beyond Shell and Qatar Petroleums Pearl production in Qatar, which Shell has reserved exclusively for internal use – are expected until 2020 or later.

Properties of Group III base oils can vary significantly, Kerwin emphasized. SK opposes Group III base oil interchange without testing, which is extremely expensive. By 2015, SK will have total Group III capacity of 2.7 million tons, making it far and away the dominant merchant supplier.

SKs joint venture refinery with Spains Repsol, dubbed SKsol, in Cartagena, Spain, is expected to stream this coming October, Kerwin said. The project is 70 percent owned by SK and 30 percent by Repsol. Using SKs UCO technology, the new plant will provide up to 630,000 t/y of Yubase-branded Group III to Europe. SK projects Group III demand in Europe to grow by 60 percent from 1.2 million t/y in 2014 to 2 million t/y in 2018.

SK Lubricants is headquartered in Seoul, South Korea.