Chevrons recently stated plans to downsize its global downstream business do not affect its commitment to its base oil business, a company official told Lube Report.
In late January, Chevron said its downstream business will be smaller and less complex, though it didnt disclose whether or how the restructuring will impact its base oil or lubricants operations. The company said it expects to have more information to share in March.
Our commitment to the base oil business – to be a global supplier of base oils – is very much unchanged, Brent Lok, base oil marketing and new business development manager, told Lube Report on Monday. Were continuing to pursue developing our markets, and looking at expansions and so on. That includes the Pascagoula refinery.
The company is constructing a 25,000 b/d base oil plant in Pascagoula, Miss., with estimated completion in 2013. Chevron has said the new facility will focus on the North American and European premium base oil markets, with Latin America also in the mix. Chevron said it expects a final investment decision on the project this year.
Lok emphasized the project is going forward. All the plans for that are continuing, as yet unchanged, he continued. It continues on the specific time line we established for it.
Chevron has been working on qualifications for its base oils in conjunction with all four major additive suppliers, he pointed out.
Weve been pretty much aggressively working with our additive supplier partners to develop all the various additive qualifications that are needed in our base oils for our customers, Lok said. Especially in Europe well be working pretty aggressively on various things like CE-9, CE-7, and in North America were working on ILSAC GF-5. With all these new specifications and even some of the older specifications, were establishing pretty much a library of qualifications in multiple additive systems for our customers use in our base oils. I think that shows a very strong commitment and intent to be in this industry long term.
Chevrons Richmond, Calif. refinery has a base oil plant with 20,000 barrels per day of API Group II capacity.
Lok said Chevron remains optimistic about the opportunities for Group II base oil market growth, especially outside North America. A lot of qualifications were doing are in fact for applications beyond North America, he noted.
Europe is the region that makes the most sense for Group II growth, according to Lok. Theres really what wed consider pent up demand for Group II base oils in Europe, he explained. Theres been a technical need for it, for quite a while. Now the specifications in Europe with advent of [ACEA] E9 precludes the use of Group I base stock. You have to use Group II if youre making a 15W-40 E9 product – you have no other choice. That is a very key event.
Australia is another market that is interested in moving to Group II, according to Lok. There are a lot of imports into Australia, he said. Group II demand makes sense there because of the higher performance tiers that are used in that market.
Caltex Australia in December said it will close its base oil refinery at Kurnell in Sydney to cut costs and improve efficiency. The 3,300 barrels per day API Group I plant is the last one in Australia. Were working with them in terms of how to figure out how to help them address their supply challenges, Lok added.
A third key Group II market is Brazil, he continued, with its extensive auto manufacturing industry. Theres a need for higher quality base stocks in that region, he stated.