SK to Double Group III Capacity


SEOUL – SK Lubricants plans to double its current 1.4 million metric tons per year API Group III base oil capacity by 2014 via a new plant in Asia next year, debottlenecking at its South Korea plant, and a joint venture with Repsol in Spain.

SK Lubricants is currently building another 11,000 barrels per day Group III plant located in Asia, Kwan Ho Choi, SK Lubricants CEO and president, said at the ICIS Asian Base Oils & Lubricants Conference here June 14. Choi said that by 2014, SKs total Yubase Group III production capacity will double to 2.8 million tons per year. That will include 500,000 tons per year from the new Asia plant.

Harry Kwon, a marketing manager of Group III base oil for SK Lubricants, said at the conference that due to several reasons, the company will not yet disclose where the new plant will be located. On Thursday, Kwon told Lube Report he also would not say whether the Asia plant will or wont be a joint venture project.

However, he did confirm the mystery plant is expected to come onstream in June or July of 2012.

SK Lubricants base oil refinery in Ulsan, South Korea, has 4,000 b/d Group II and 17,000 b/d of Group III capacity. We will do a revamping at Ulsan, including debottlenecking, at the beginning of next year, Kwon said in an interview. The revamp will increase Ulsans total Group II and III capacity by about 240,000 tons per year. He explained the specific Group II and III increases the change will provide are not yet known, pending finalization of design.

In June 2010, SK Lubricants announced plans to partner with Repsol YPF to build a new 13,300 b/d Group III base oil plant at Repsols Cartagena, Spain, refinery. It is scheduled to begin production in 2014. Its going well, Kwon said. Its still on schedule.

The SK-Pertamina joint venture in Dumai, Indonesia, which is 65 percent owned by SK, has about 7,000 b/d of Group III capacity. It began production in 2008.

Kwon did say that SK sees China as the biggest emerging market for Group III. There is a big Group II and Group III demand in China because there are many Japanese OEMs in China, and Japanese OEMs and U.S. OEMs are leading the growth of lower viscosity and performance grade [engine oils], Kwon told Lube Report.

Some people forecast that the Group III will be surplus over the next few years because SK, Neste [joint ventures with Bapco and Takreer], and Shell [gas-to-liquid base oils from the Shell-Qatar Petroleum Pearl project] products will be released to the market, Kwon pointed out. He disagreed with the notion, explaining that he anticipates increased Group III availability should lead to a sharp increase in demand for higher performance engine oils and lubricants. I dont know how much volume other Group III suppliers will offer on the merchant market, he added.

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