Base Stocks in the News in 2019


Base stocks were the hot topic of 2019 in Europe, the Middle East and Africa, from expanded production capacity to industry-changing regulations to sanctions with global ripple effects.

A number of large base oil projects came to fruition in an industry already mired in a global supply glut. The European Union adopted a quota on imports that has lubricant blenders squawking, and Irans base oil exporters struggled against renewed United States sanctions.

Elsewhere, the European Automobile Manufacturers Association delayed a 2018 update of its ACEA engine oil sequences to 2020. A rush of finished lubricant, base stock and chemical additive projects were completed or announced.

EU Group II Quota

In November, the European Commission adopted a quota for API Group II base oil imports into the EU, allowing the first 200,000 metric tons imported every six months to avoid a 3.7 percent duty.

The decision came despite heavy lobbying from EU members and industry associations that called for larger quota volumes, some more than double the annual number of 400,000 tons that the commission settled on. Industry sources expressed concerns about logistics of the new program plus the fact that European Group II demand far exceeds domestic capacity and that 400,000 t/y will not make up the difference.

Iran, which is normally a key exporter of Group I oils,, was beset by renewed U.S. sanctions over its nuclear program. For a time Iranian refiners tried to keep cargoes flowing by shipping directly to end user markets rather than through transshipment hubs in the United Arab Emirates. Later Iranian oils were trucked into Iraq for subsequent transportation to markets such as Syria and the U.A.E.

In December, Nynas AB filed for reorganization protection in a Swedish court after banks refused to extend its loans. The company, a joint venture between Finnish refiner Neste and Venezuelas national oil company, Petroleos de Venezuela S.A., blamed its financial woes on U.S. sanctions on Venezuela, which forced it to purchase from more expensive crude oil sources.

One of the worlds largest naphthenic base stock suppliers, Nynas said it plans to return to profitability in three years. The situation had become so dire that Neste wrote off its investment on the JV earlier in the year after financial reports showed massive losses in profitability.

A fire in late September shut down Lubrizol Corp.s lubricant additives facility in Rouen, France, one of the companys main production plants in Europe. Regulators said extensive testing showed the incident did not damage the environment or cause significant health risks, but by mid-December the regional government had only allowed partial resumption of activities.

Regulations and Standards

The biggest news on the lubricant standards front came in April with the announcement that the European Automobile Manufacturers Associations 2018 engine oil sequences would be delayed until at least mid-2020. Originally intended to be adopted by the end of 2018, the sequences have been delayed due to hold-ups on the North American side of the process, namely the fact that ACEAs 2018 sequences include several engine oil tests from ILSAC GF-6, a North American specification scheduled to be commercialized in May of 2020, four years behind schedule. ACEA officials said the delay would not cause any significant problems.

The technical association of Europes lubricant industry, ATIEL, vowed to accelerate the development of decades-old base oil interchange and viscosity grade read-across guidelines In April, the European Parliament voted to adopt stricter carbon dioxide emission standards for new cars and vans in the EU after 2020.

ASTM International, with the help of the European Lubricating Grease Institute and the National Lubricating Grease Institute, approved a new oxidation test, ASTM D8206-18, for biobased greases in February.

Facility Openings and Expansions

The growing surplus of base oil refining capacity didnt discourage companies from continuing to invest in supply. The most ambitious project was completed in February, when ExxonMobil announced its 1 million t/y Group II base oil plant in Rotterdam, the Netherlands, had begun commercial production, signaling the start of Europes first large-scale Group II source. The plant more than tripled existing virgin Group II capacity in Western and Eastern Europe.

SK Lubricants and Repsol made a pact in June to increase capacity by 200,000 t/y at their joint venture base oil plant in Cartagena, Spain. The plant currently has capacity to produce 186,000 t/y of Group II oils and 450,000 t/y of Group III.

Kazakhstans Hill Corp. completed construction of a 30,000 t/y base oil rerefinery in Shymkent, the product of which will be used internally by the company for the manufacturing of greases. Another base oil rerefinery is also planned in Turkey by waste oil collector Tayras, which plans for a production capacity of 42,000 t/y of Group II base stocks at the cost of U.S. $38 million.

Lukoil opened a 100,000 t/y blending plant in Kazakhstan for U.S. $94 million to more effectively penetrate the China and Central Asia markets. Algerias Sarl Sopremac opened a 12 million blending plant with capacity to produce 25,000 t/y in January. JV Opet Fuchs announced in September it had started operations at a lubricant blending plant in Turkey at the cost of 24 million.

Tatneft announced plans to construct a $15.5 million blending plant in Russia. Ineos agreed to build both a linear alpha olefin and polyalphaolefin plant in Saudi Arabia as part of a larger petrochemical project. The LAO plant will have capacity of 400,000 t/y. The PAO plant would be the first of its kind in the Middle East.

Mergers and Acquisitions

Saudi Aramco reached an agreement in March to buy a 70 percent stake in Sabic, one of the worlds largest chemical companies, for a proposed $69 billion. The company also agreed to a purchase of 17 percent of South Korean oil refiner Hyundai Oilbank for $1.2 billion. Both purchases are part of an effort to expand its downstream operations, though lubricants arent the primary focus of the company. Still, its chemical businesses manufacture a number of products useful to the lube and metalworking fluids industry, such as triethanolamines, diethanolamines, monoethanolamines, OXO alcohols, benzene and glycol.

In January, French oil products supplier Rubis acquisition of East African lube distributor KenolKobil for $353 million was approved by government authorities, while Malaysias Petronas Chemical Group acquired the Netherlandss lube oil additive manufacturer BRB International B.V. for 163 million. Timken Co. acquired German-based automatic lube system supplier Beka Lubrication for approximately $165 million in September.

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