LONDON – Abu Dhabi National Oil Co. signed an exclusive agreement last week for Chemlube S.A. to distribute its API Group III base oils in Europe.
The companies announced the deal during the ICIS World Base Oils & Lubricants Conference in London.
Adnoc has Group III production capacity of 500,000 metric tons per year, as well as 100,000 tons of Group II base oils, at its plant in Ruwais, Abu Dhabi, United Arab Emirates. The companies expect about 10 percent of the Group III output to be sold by Chemlube.
Certainly, its a significant amount of oil. We anticipate in excess of 50,000 tons into Europe, Chemlube Director of Business Development Joe Rousmaniere told Lube Report.
The global base oil market has been over-supplied with Group III since Adnoc opened its plant in 2016. Adnoc has sold some of its Group III in developing markets such as India, which traditionally has had little technical requirement for the grade. Adnoc would like to gain maximum value by concentrating on moredemanding engine oil markets where formulators place more value on Group III performance. Western and Central Europe are generally the worlds highest-priced Group III market.
Synthetic passenger car engine oils formulated with ADBase base stocks have received approvals for meeting several important standards in the U.S., including API SN, GM Dexos 1 and ILSAC GF-5, Adnoc said in a statement. The company is seeking original equipment manufacturer and ACEA approvals in Europe.
Chemlube S.A. is a sister company of Chemlube International LLC, which claims to be the worlds largest independent trader of Group III oil. The company is also an agent for Bapco, Bahrains national oil company.
In May 2017, Adnoc signed a similar exclusive distribution agreement with Dutch distribution company Penthol for Group III sales into the United States. Adnoc distributes in the Middle East through its own company Adnoc Distribution. Vertex Energy serves as Penthols agent for those sales.
Chemlube officials acknowledged making a significant effort to land the Adnoc account.
I made it a mission to deal with these guys, Rousmaniere said. I recognized early on that [Adnoc] were the coming thing. We pursued them very hard.
Rousmaniere has previous experience helping refiners develop Group III businesses. In the late 1990s and 2000s he was general manager for Lithcon Petroleum USA as the Houston company served as SK Lubricants sales agent for Group III in the Americas. He later headed the Group III business for Malaysias Petronas for the first six years after its launch in 2008.