Europe, Middle East and Africa together account for 25 percent of the worlds finished lubricants market of 40 million metric tons a year, according to recent data from the U.S.-based market research firm Kline and Co. Yet the region packs more weight when it comes to base oil supply, a new publication makes clear.
Issued earlier this month by LubesnGreases EMEA magazine, the new 2018 EMEA Guide to Base Stocks shows EMEA has 17.4 million metric tons per year of mineral base oil capacity. That amounts to 30 percent of the global supply of 57.3 million t/y, the magazine calculates. The region also enjoys a high concentration of plants producing key synthetic materials such as esters, polyalphaolefins, polyalkylene glycol and polybutene, all of them sited within Europe.
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Reviewing the entire region, the 2018 Guide shows that Western Europe leads with 6.6 million t/y of base oil production capacity, followed by Central and Eastern Europe with almost 5.2 million tons. The Middle East, where deep-pocketed merchants have built Group II and Group III plants to serve export markets, has 4.9 million t/y of capacity, and Africa a scant 700,000.
By type, the regions mineral base oil bets are weighted heavily towards Group I; it has a combined 11.8 million t/y of API Group I base stock, or 68 percent. It also has 1.7 million t/y of Group II; 3.2 million of Group III; and 730,000 t/y of naphthenics capacity, the guide indicates.
Major changes on the way, however, will splash into this sleepy supply pool and ripple out to global markets. Most prominently, ExxonMobil, the worlds largest base oil producer, is adroitly pivoting away from producing largely API Group I base oil in the region, and preparing to commission a world-scale Group II plant in Rotterdam by year end. Although the company has not disclosed Rotterdams nameplate capacity, LubesnGreases estimates it at 1 million t/y.
In early May, ExxonMobil announced that it also will sell off its large fuels refinery in Augusta, Italy, which includes a 782,000 t/y Group I base oil plant, to Algerian national oil company Sonatrach. Upon the deals closing, also slated for year end, the oil giant will still be able to tap more than 1 million t/y of Group I supply from its other facilities in Fawley, United Kingdom, and Port Gravechon, France. And base oil novice Sonatrach also is expected to supply base oil from Augusta to ExxonMobil, post-sale.
Published each July, the EMEA Base Stock Guide is a colorful wall chart, expanded this year to 98 x 67 centimeters. It pinpoints the locations and ownership of 70 mineral base oil refineries and rerefineries and 61 specialty chemical plants making nonconventional base stocks around Europe, Middle East and Africa. The mineral base oil types covered include API Groups I, II, III and naphthenics, while the nonconventional types are polyalphaolefins, esters, polyalkylene glycol, polyisobutene, silicones and phosphate esters.
Listed plants are color-coded by base oil type and keyed to a regional map that makes it easy to see where these producing assets are concentrated (or absent). Plant capacities are up to date as of June 1, and shown in metric tons per year.
Key events and trends can be traced between the lines of the 2018 edition:
- Europe has significant capacity – 300,000 t/y – for making polyalphaolefin, the worlds most popular nonconventional base stock after Group III mineral oils), as well as substantial capacity for esters, PIB and PAG. Tatneft in Russia proudly rejoined the brotherhood of PAO producers in February, after an eight-year hiatus due to lack of feedstock. And, as Lube Report EMEA readers know, the 15,000 t/y PAO plant in Netherlands, built by Chemtura and owned now by Lanxess, is slated for closure before the years end.
- The Middle Easts most recent success was the long-awaited commissioning of Luberefs 708,000 t/y Group II plant in Yanbual Bahr, Saudi Arabia. Yanbu also can make 175,000 t/y of Group I bright stock. Although it was nearly two years overdue, Yanbus first export cargo went to India in February, sailing into the fiercely competitive Group II arena.
- Africa remains eerily empty of base oil assets, with only six small plants operating throughout the entire continent, all making Group I base oil. While some African lubricant producers are known to make esters for their own internal needs, the market appears to have no native supply of nonconventional base stocks either. While this may hint at a budding opportunity, two hurdles lay in the path of any new builds: Africa can access ample volumes of mineral base oil from abroad, and nonconventional base stocks present very high barriers to entry.
However, observed Michele Persaud, the guides editor, we do see that rerefining has excited the interest of some investors, especially since it is possible now to produce high-value Group II and even Group III base stocks from used lubricants. Three new rerefineries totaling 140,000 tons per year are listed in the guides Upcoming Capacity section, including two that are scheduled to start up this year in Africa; one in Egypt and one in Algeria. A third one is expected to come onstream next year in Romania, and all three are promising to deliver Group II barrels.
Others are also eager to slake EMEA thirst for Group II. The guide indicates that base oil refiners in Central and Eastern Europe also aim to serve up 1.3 million tons of fresh capacity by 2021. Although much of this involves projects at Gazprom Neft, Lukoil and Rosneft plants in Russia that were delayed before (and could be again), ambitious independents in Kazakhstan and Bosnia-Herzegovina are moving ahead with substantial additions, too.
Copies of the 2018 EMEA Base Stock Guide were mailed this month to all print subscribers to LubesnGreases EMEA along with their June edition; copies were also mailed to the magazines digital subscribers.
The EMEA Guide follows on our very popular Guide to Global Base Oil Refining which was released in June, said Howard Briskin, publisher of LubesnGreases. And in September, we will issue our third base stock guide of the year, the 2018 Nonconventional Base Stocks Guide that maps the plants around the world making the seven most popular types of synthetic base oils. It clearly lays out the geographic and ownership structure of each one of these specialized chemistries, where the field of competitors is very different than the refining world.
To order the EMEA Base Stock Guide as a print copy or digital PDF, and to learn more about the other Base Stock Guides, visit https://www.lubesngreases.com/base-stock-guides/