Adnoc Seeks Approvals for Base Oils

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ABU DHABI, United Arab Emirates- Abu Dhabi National Oil Co. expects to complete formulation approvals for ADbase, a range of API Group II and Group III base oils, within the next year. Speaking on the sidelines of the Base Oil & Lubes Middle East 2018 conference held here, an executive said Adnoc is also expanding into new markets in Asia. According to reports, the company has also been selling base oils into India.

The Ruwais, U.A.E.-based refiner has appointed Adnoc Distribution to handle base oil sales in the U.A.E., and Gulf Cooperation Council countries after inking similar agreements in Europe with Chemlube, and with Penthol for the United States. Adnoc Distribution also markets finished lubricants under the Voyager brand in the U.A.E. and through a network of distributors internationally.

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Ahmed Al Hamed, manager of base oils sales at Adnocs refined products marketing unit, told delegates during a presentation that Adnoc had secured approvals for API SN, ILSAC GF-5 and General Motors Dexos 1 specifications.

Adnoc is working with additive companies to achieve formulation approvals for ACEA and original equipment manufacturers, he added. ACEA is the European Automobile Manufacturers Association. Securing early formulation approvals is vital for Adnoc, as base oils without them often sell at a discount in the market.

Still, the developments appear to vindicate Adnocs decision to pursue its own marketing strategy and shoulder the time consuming process of gaining approvals. When the Ruwais plant was first conceived, Adnoc contemplated having the oils that it produced marketed by Finnish refiner and marketer Neste, but discussions for such an agreement ended in 2016.

With its high viscosity index – ranging between 132 and 139 for 4, 6 and 8 centiStoke oils – and low volatility, Adnoc is hoping to capture a significant slice of demand for high quality base oils that can help meet rising performance demands for automotive engine oils. According to Al Hamed, the company uses a single source of high paraffinic crude oil feedstock to produce high quality Group III base oils for top lubricant manufactures.

Later this month Adnoc is due to unveil a revamped downstream strategy and is expected to announce an expansion of the overall Ruwais refinery as part of U.S. $109 billion investment in the sector over the next five years. Adnoc intends to double its refining capacity by 2025, and speculation has intensified that base oils may be part of its growth strategy.

Currently, its Ruwais facility can produce 500,000 metric tons a year of Group III base oils and 100,000 t/y of Group II in 2 cSt, 3 cSt and 4 cSt as well as 6 cSt and 8 cSt.

Expectations that Group II and Group III base oil supply from the Middle East will disrupt local markets and sway consumers to higher specification products are yet to be realized, Adnoc says. Price remains a determining factor in base stock selection, but the increased variety of oils in the market is helping educate customers in the long term.

Meanwhile, Adnoc has created a non-speculative trading entity to bolster sales of refined products from its downstream operations, and recently established Adnoc International, a U.S. $1 billion investment arm to focus on international downstream assets. Currently all of Adnocs products are sold on a freight on board basis, but the new entity could begin selling on a delivered basis.

Al Hamed said customers have responded positively to Adnocs flexible base oil shipping facilities at Ruwais. Adnoc, however, declined to say whether base oils produced there will be incorporated into the new trading entity. Adnoc has recently established the unit, [and] it is too early to specify which products will be included, the company said in an e-mail statement.

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