Group I Plant Opens in Maoming

Maoming Haihe Chemical Co., formerly known as Maoming Dazetian, is preparing to open a new API Group I base oil plant, with operations slated to begin by early November. Analysts say it will be the worlds first new Group I plant in 20 years.

With an annual capacity of 200,000 tonnes, the new plant is located in Maonan Petrochemical Industry Park, in Maoming city, adjacent to a 25 million tons per year Sinopec petrochemical refinery, which itself includes a base oil plant with capacity to make Group I, II and III stocks.

There is a big unsatisfied demand for high-viscosity Group I base oils, which are mostly imported, said Zhang Jianming, director of sales at Maoming Haihe. In Southern China market, we are actually one of the only two facilities that is capable of producing high-viscosity Group I oils, the other one being Sinopec Maoming.

According to Zhang, Maoming Haihes plant makes Group I solvent neutral 350 base oils and some special wax products that are marketed mainly in Southern China. The plant also makes low-viscosity oils as byproducts, but Zhang said the amount is inconsequential.

Refiners around the world have developed dozens of Group II and III plants in the past quarter century, both through new construction and upgrades to Group I facilities. No Group I plants have opened since 1997, when ThaiLube and IRPC opened plants in Chonburi and Rayong, Thailand, respectively, and Luberef opened its plant in Yanbual Bahr, Saudi Arabia. To the contrary, numerous Group I plants closed since then, as base stock demand shifted from Group I to Group II and III.

Group I demand is still falling, but the growing list of Group I closings has led to shortages or at least tighter supply of some products that either are not made by Group II and III plants or are made in smaller quantities: bright stock, petroleum wax and heavy-viscosity base stocks.

Maoming Haihe is a joint venture formed by Guangdong Sunion Chemical & Plastic Co. and Guangdong Yihai Technology Co. Guangdong Sunion was previously a collective enterprise owned by all the employees of Sinopec Maoming.

Steven Zhang, of Kline & Co. consultants, said he believed Maoming Petrochemical had attempted to develop Group I capacity but had failed to obtain approval from Sinopec. He speculated that Maoming Haihe succeeded because it is not directly owned by Sinopec.

Maoming Haihe officials declined to identify the feedstock for their plant or to say if it comes from the Sinopec refinery.