SINGAPORE - China is one of the worlds largest base oil importers, but it has a surplus of naphthenic base stocks and is heading toward an even larger excess in coming years.
Already Asias largest producer of pale oils, China is due to see its naphthenic base stock production capacity grow by at least 38 percent by the end of next year, an analyst from Kline & Co. consultants said during a seminar ahead of the ICIS Asian Base Oils & Lubricants Conference here last week.
China National Offshore Oil Co. is building a plant in Taizhou that is designed for capacity to make 200,000 metric tons per year of naphthenic base oil along with 400,000 t/y of paraffinic API Group II stocks. In addition, Panjin Northern Asphalt is constructing an expansion that will add 300,000 t/y of naphthenics capacity at its plant in Panjin city, Liaoning province. Both of those projects are scheduled to be completed by the end of 2016.
And the countrys pale oil capacity could rise even higher if PetroChina moves forward with a proposed 600,000 t/y expansion at its naphthenics plant in Karamay.
A plan for that project has been announced, but execution has not yet started, Klines Steven Zhang said. The company is not likely to launch the new plant in the near future.
But even without the Karamay project, the oversupply situation will be serious, Zhang concluded.
China currently has capacity to make 1.3 million t/y of naphthenics at four facilities: the Karamay plant, which already has capacity of 600,000 t/y; a 300,000 CNOOC plant in Binzhou; a 200,000 t/y PetroChina plant in Liaohe; and Panjins plant, which currently has 200,000 t/y of naphthenics capacity.
Those facilities currently operate at 91 percent of capacity, supplying Chinese pale oil demand of 1.19 million t/y, Zhang said. Naphthenics demand in China has been growing slowly, he added, at a scant cumulative average annual rate of 0.2 percent from 2009 to 2014. Kline forecasts that the pace will pick up during the next 10 years to 1.7 percent.