Indias Used Oil Market Lags

MUMBAI, India - India is rerefining far less used lubricants than it could because of logistical challenges and apprehensions about the quality of recycled base oil, an expert said at an industry event here last month.

Use of rerefined oil is hindered by the perception it is inferior to virgin base oils, said Anant Bhargava, chief executive of IFP Petro Products (P) Ltd., a rerefiner of used oil in the northern state of Uttar Pradesh.

Lubricant users and manufacturers in India consider rerefined base oils spurious, and believe they cannot trust them enough to use in lubricant formulations, Bhargava told the All India Base Oil, Lubricant and Wax Conference, which was jointly organized by Rex Fuels and Petrosil Group in February. But rerefined base oil can be on par with the quality of virgin base oil, he noted.

Used lubricants are hazardous waste, but they can be safely handled and converted into a valuable product, Bhargava said.

Bhargava noted that rerefiners in Western countries employ vacuum distillation and hydro finishing processes along with well-organized collection networks to collect and rerefine used oil. In contrast, practices in India are less sophisticated, with plants using clay polishing technology and rerefining in batches.

The lack of organization of used oil collection is the biggest challenge for oil recyclers in India, Bhargava said, adding that the lack of an environmental ethics also impedes lubricant recycling in India.

Oil companies [in the West] buy back not because of any compulsion or legislation. They buy used oil because they feel it is their social obligation, he said.

Bhargava also said that end users, government and oil companies in India dont play an active role in promoting the use of used oil. However, the situation is different in the West because the government, oil companies and citizens support and actively participate in used oil recycling, he added.

India has 257 recycling facilities with capacity to produce 800,000 metric tons of API Group I base oils. Numerous Western rerefineries now produce Group II and Group III oils, Bhargava stated.

The Indian used oil market could unlock its potential by adopting remedial measures, he said. These include organizing used oil collection, obtaining oil company support for collection, low-interest financing from banks and government incentives to recyclers, Bhargava said.

Bhargava said the growth potential for the used oil market is huge in India, domestic base oil production capacity is far less than demand. The country imports about 62 percent of its annual requirement of 4 million metric tons, valued at Rs 26,000 crore (Rs 260 billion or U.S. $4 billion). Used oil recycling in India offers market potential of over Rs 10,000 crore over the next three to five years, he added.