ExMo Completes Singapore Expansion

ExxonMobil confirmed that it completed an expansion of its base oil plant at Jurong, Singapore, last quarter. The project further saturates a market that already has surplus capacity, but industry observers said its immediate impact may be muted because the company may be slow to utilize the expansion.

The Jurong facility is one of two that ExxonMobil has in Singapore, the other being at Pulau Ayer Chawan, on Jurong Island. Before the expansion, the Jurong plant had capacity to make 1.3 million metric tons per year of API Group II stocks, while the Pulau Ayer Chawan plant can make 650,000 t/y of Group I.

ExxonMobil has not disclosed the size of the expansion, but industry analysts have estimated it to be between 350,000 t/y and 500,000 t/y. R. David Whitby, of British consulting firm Pathmaster Marketing, who collaborates with LNG Publishing Co. in the production of their global base stock guides, pegged the expansion at 425,000 t/y.

An ExxonMobil spokesman told Lube Report Asia last week that construction for the project was completed in January. The company declined to discuss whether the new capacity is being used, and base oil buyers and sellers say they are unaware of any increase in the volume of oil coming from the plant. Analysts speculated that the company is using only a portion of the additional production capability, and that it may take more than a year to fully ramp up output.

Theres no reason for them to ramp up production right off the bat, said one analyst who asked not to be identified. The feedstock that they would use to make base oils can still be used to make diesel, so they can take their time and increase base oil output as they build sales.

Some cited the example of a previous expansion at ExxonMobil's plant in Baytown, Texas, United States, when the facility added capacity to make Group II oils. In that case ExxonMobil did not report the full capacity of facility until two years after the project was completed.

ExxonMobil has also declined to disclose whether the expanded capacity will be for Group I or II stocks. Analysts say Group II is more likely. The project moves the Jurong plant ahead of GS-Caltexs 1.3 million t/y Group II and III plant in Yeosu, South Korea to become the third-largest base oil plant in Asia. The largest is S-Oils 2,016,776 t/y Group II/III plant in Onsan, South Korea, followed by SKs 1,991,878 t/y Group II/III plant in Ulsan, South Korea.

ExxonMobil is the worlds largest base oil producer and the largest supplier to the merchant market.