Veiga estimated the 2011 lubricant market size of key South American countries:

Brazil, 1.2 million tons
Argentina, 279,900 tons
Venezuela, 219,600 tons
Chile, 156,600 tons
Colombia, 153,900 tons
Peru, 96,300 tons
Ecuador, 69,300 tons

Brazil alone accounts for more than half of South Americas demand for finished lubricant. The countrys
South and Southeast regions (with 56 percent of Brazils population) account for 71 percent of lube consumption, and 73 percent of GDP.

Automotive Market
According to Veiga, Brazils passenger car and light commercial fleet totals 30 million. Last year 3.3 million new units were sold, up 9 percent from 2009. Flex-fuel engines predominate-51 percent of cars sold have small engines (1,000 cc), and manual transmissions account for 95 percent of domestic sales.

The motorcycle fleet is 17 million strong. New units sold in 2010 totaled 1.8 million, up 15 percent from 2009, and small engines (90 to 150 cc) accounted for 88 percent of sales.

Trucks and buses total 2.3 million, including 186,000 new units sold in 2010, up 40 percent from 2009. Brazils OEMs have adopted selective catalytic reduction to comply with 2012 emissions legislation similar to Euro 5.

Lube Producers
Veiga said that Brazils nine dominant lubricant producers (members of Sindicom) account for 85 percent of the lubricant market, while another 120 registered companies make up the remaining 15 percent. Petrobras has the dominant market share in passenger car, heavy duty and industrial lubricant categories. From January through August 2011, the Sindicom members total finished lubricant market share was:

Petrobras, 24 percent
Chevron, 16 percent
Ultra, 15 percent
Cosan and Shell, 14 percent (each)
Petronas, 9 percent
Castrol and YPF, 3 percent (each)
Total, 2 percent

In addition to demand growth, Veiga explained the dominant trend in Brazils lubricants market is the rising minimum quality level. With projected demand growth of 2.5 percent per year from 2012 to 2020, this means a significant increase in demand for lower viscosity lubricants, which in turn means more API Group II and III base stocks.

Base Oil Supply
Carlos Roberto Martins Barbosa, Petrobras special projects trading general manager, discussed the companys plans to build a Group II refinery in Rio de Janeiro. Dubbed Comperj, the refinery will begin producing clean diesel fuel in 2013 and is slated to produce base oils in 2016.

Barbosa said Petrobras Group I and naphthenics refineries will keep operating, and improvements at those plants are under way. State-owned Petrobras has access to base-oil-friendly paraffinic and naphthenic Brazilian crudes at a competitive cost, and nearly 65 percent of Brazils total base oil demand is close to the companys huge Reduc (Duque de Caxias) complex in Rio de Janeiro.

The base oils unit will expand Petrobras nameplate capacity by almost 50 percent, producing 6,800 barrels per day of Group II, said Barbosa. Petrobras plans to sell the Group II in Brazils merchant market, but it will only meet part of Brazils demand, he added.

Domestic rerefined Group II from Brazils Lwart Lubrificantes (whose 2,550 b/d Group II rerefinery will stream in early 2012) and imported Group II and III from the U.S., Asia and elsewhere will be needed to meet Brazils growing demand.