Terminal storage fees are also less in the U.A.E than in nearby markets due to abundant tank space, Kumar noted. He said the U.A.E is the key link in the movement of base oils and lubricants within the region and to outside countries, with API Group I base oil coming from Saudi Arabia, Iran, the Far East, Europe and Commonwealth of Independent States countries. Group II comes from South Korea and other parts of the Far East, Saudi Arabia and the United States, while Group III comes from South Korea, Malaysia and Bahrain, as well as the U.A.E.

Kumar said the U.A.E.s own lubricant consumption is relatively low, but its blending capacity is the highest in the region. The reason is that this is a place where not only base oils are imported, but finished products are also getting exported from to all neighboring regions like Africa and CIS countries, he told attendees at the conference.

The blending capacity of the U.A.E is estimated at 1.25 million metric tons per year, accounting for 35 percent of the Middle Easts total capacity of around 3.5 million t/y, Kumar said. The estimated blending capacity of some of the regions other nations: Iran, 800,000 t/y; Saudi Arabia, 700,000 t/y; Iraq, 200,000 t/y; Syria 200,000 t/y; Jordan, 100,000 t/y; Yemen, 80,000 t/y; Kuwait, 60,000 t/y; Oman, 40,000 t/y; Qatar 40,000 t/y; and Lebanon, 12,000 t/y.

The Middle East has 93 blending plants, including 49 major units, Kumar said in his presentation. The U.A.E dominates the region with 32 plants, followed by Saudi Arabia at 15 plants, Iran at 12 plants and Iraq at eight plants. Kuwait and Yemen have five plants each, while Oman has four plants. Lebanon, Jordan, Qatar and Syria have three plants each.

The Middle Easts base oil production capacity is 4.9 million t/y, and the largest facilities are those that have opened or expanded within the past 10 to 15 years.

Adnoc Distributions sister company Adnoc Refining can produce 500,000 t/y of Group III and around 100,000 t/y of Group II, while Bahrains Bapco can produce 400,000 t/y of Group III. A joint venture between Shell and Qatar Petroleum has the capacity to produce around 1.4 million t/y of Group III at its Pearl gas-to-liquids plant in Qatar, while Saudi Arabias Saudi Aramco Base Oil Co. can manufacture 600,000 t/y of Group II and 400,000 t/y of Group I.

The Middle East has an abundant supply of Group II and Group III, Kumar said, adding that the region accounts for 30 percent of global Group III production. He noted the consumption of Group III in the region remains low currently, but gradual migration towards high-quality base oils continues.

Kumar said emission regulations, fuel economy, requirement for all-climate oils, long drain intervals and engine performance are some of the factors favoring usage of Group II and Group III base oils.
Automotive lubricants account for 70 percent of total Middle East lube demand, Kumar said, the industrial segment 30 percent. Vehicles from American, European, Korean, Japanese, Chinese and Indian original equipment manufacturers all have a presence in the region. The minimum performance level of engine oils used in gasoline-powered cars is API SJ and for diesel engine oils, it is API CH-4.

He noted that recommended oil drain intervals, which used to be 2,000 to 3,000 kilometers earlier, are now at 5,000 to 10,000 km, and further improvement is expected going forward as awareness among people about high oil drain period increases.

Kumar said the U.A.E.s lubricant production is estimated at 740,000 t/y. The country consumed only 140,000 tons last year but exported 600,000 tons. Out of total shipment, marine oil exports accounted for 150,000 tons. The U.A.E exports auto oils with lower API quality and higher SAE grades to Gulf Cooperation Council countries, Africa, Afghanistan, Yemen, Iraq and CIS countries. Small and medium-size oil companies dominate, accounting for more than 50 percent of export volume.

Adnoc Distribution, which markets finished lubricants under the Voyager brand in the U.A.E. and through a network of distributors internationally, is the biggest supplier in the U.A.E. with a 26 percent market share. Emirates National Oil Co. holds a 14 percent share, while Total and Shell have a share of 12 percent and 11 percent, respectively. ExxonMobil accounts for an 8 percent share, Gulf Oil and Chevron (Caltex) hold 6 percent each and Petromin 3 percent.

Kumar said the country is slowly migrating towards SAE 5W-40 and 5W-30 grades in passenger cars and from SAE 15W-40 and 10W-40 grades in sport utility vehicles.