More Base Oils in European Pipeline


MOSCOW – API Group I rationalization continues to occur in Europe, Russia and the Commonwealth of Independent States – with more expected in the Middle East – while an influx of new Group II capacity is projected to result in a surplus of that grade in Russia and CIS countries, an industry insider said.

Base oil manufacturers closed more than 3.8 million metric tons of Group I base oil capacity globally from 2013 to 2019, Dmitry Terentyev, business development manager at Argus Media, told RPIs Global Lubricants conference here on Oct. 10. Most of these capacity closures took place in Russia and the [other] Commonwealth of Independent States and Europe … Group I base oil capacity closures are planned for next year in the Middle East as well, he said. CIS states include Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan and Uzbekistan.

The consultancy found that despite reduced global demand for Group I, Africa remains a key importer, securing supply from Europe and the Middle East, and said that exports from Europe to the continent will continue to grow. The Russian product is exported to Europe for the accumulation of bulk, and onward shipment to Africa and India, Terentyev, based in Argus Moscow office, explained.

Global Group II base oil capacity is increasing steadily, and demand for it is no longer in a deficit, the consultancy found. Most new production capacity that came onstream in the last few years was in Europe and the Middle East, along with China. ExxonMobil commissioned a 1 million t/y Group II plant in Rotterdam earlier this year.

The commissioning of Luberefs Yanbu 708,000 t/y Group II plant in 2018 resulted in a Group II oversupply in the Middle East, which is expected to remain in the near future, according to Argus.

Regarding the Group II base oils in Russia and the CIS region, it is still undersupplied and expected to move into surplus with the commissioning of more than 500,000 t/y capacity in 2020, Terentyev said, adding that Rosnefts Angarsk and Novokuibyshev refineries, Lukoils Volgograd site and Hill Corp.s Shymkent facility all have projects scheduled to start Group II base oil production in 2020.

In the Group III segment, Argus found Europe and Africa are among those that source Group III base oils from the Middle East and Asia-Pacific.

In Russia, Terentyev said base oil exports totaled 930,000 t/y in 2018, up from 870,000 tons in 2017. The Netherlands, Belgium and Greece were among the key recipients of these products. Argus also found that most of Russias exports to Europe are transported via Baltic ports, while other volumes are shipped to Turkey, Bulgaria and Romania from Black Sea ports.

Russian base oil marketers Taneco and Yanos exported 142,800 t/y and 93,700 tons, respectively, of Group II and Group III to Europe in 2018, the firm said.

Taneco has a plant with 90,000 t/y Group II and 100,000 of Group III base oil production capacity in Nizhnekamsk. Yanos, a joint venture between Rosneft and Gazprom Neft, operates a 100,000 t/y Group III base oil plant in Yaroslavl.

Domestically, demand for base oils in Russia will shift towards higher quality grades, Argus found, meaning Group I will be gradually replaced by Group II and Group III.

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