Phillips 66 Refines Its Niche

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A new era dawned at Phillips 66 yesterday, but to customers it will be business as usual as ConocoPhillips officially completed the separation of its upstream and downstream operations.

There will be no change to the base oil business, a Phillips 66 source told Lube Report. We will be two separate publicly traded companies providing the products and services formerly offered under one roof. Phillips 66 base oil and lubricants will be the same as far as the marketplace is concerned.

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Headquartered in Houston, Phillips 66 remains a base oil producer and national lubricant marketer focused on refining, transport, marketing and chemicals business. The company says it is well-positioned to market Pure Performance-branded API Group II and Ultra-S Group III base oils in North America.

Phillips 66 base oil marketing activities include the sale of Pure Performance hydrocracked base oils to customers worldwide. It also purchases a wide range of base oils from several North American refiners for the manufacturing needs of finished lubricants product lines, according to its newly published Refining and Marketing Profile Book. Additionally, the company has an exclusive agreement with Koreas S-Oil Corp. to distribute and marketits high-viscosity-index base oils in North America.

Our lubricants customers should expect tocontinue receiving reliable, quality products. Our goal is to make this a seamless process for our customers, a press office spokeswoman told Lube Report,

Labels consumers have come to know on the shelves will remain unchanged, but will carry the new company logo. Phillips 66 will market engine oils, aviation oils, power transmission fluids, industrial lubricants, greases and environmentally conscious lubricants under the Conoco, Phillips 66, 76 and Kendall brands, as well as other specialty brands.

In the United States, the distribution network consists of marketers, mass merchandise stores, fast lube stores, tire stores and automotive dealers.

In Europe, Phillips 66 markets motor fuels under the Jet brand through company-owned outlets in Germany and Austria and dealer-owned outlets in the United Kingdom. The Jet line of fuels and lubricants in Western Europe is a very important brand in a very important market. Nothing will change in regard to it, the company source said. The company also has an equity interest in a joint venture that markets products in Switzerland under the Coop brand.

The new Phillips 66 will also assume ConocoPhillipss role as the official partnering company in several joint ventures.

We remain committed to all of the joint ventures we are currently engaged in, the company source said, adding that included Chevron Phillips Chemical Co. Chevron Phillips is one of the worlds top producers of olefins and polyolefins and a leading supplier of aromatics, alpha olefins and styrenics, among other products.

At the Excel Paralubes base lube oil refinery in Lake Charles, La., the joint venture with Flint Hills Resources will not be affected. The company said the only change is that ConocoPhillips shifted its 50 percent ownership in the refinery to Phillips 66.

The plant processes vacuum gas oil into about 22,200 barrels per day of Group II base oil and almost 13,000 barrels per day of co-products such as naphtha, ultra-low-sulfur diesel fuel and kerosene, according to company statistics.

Our midstream and chemicals businesses are already high-return businesses, Greg Garland, the new Chairman and CEO of Phillips 66, told analysts during an April 9 update conference call.

ConocoPhillips will now focus on exploration and production, according to the repositioning plan,which claimsthat two independent businesses focused on specific portions of the energy industry, have greater potential to outperform competition and create differentiated value.

ConocoPhillips was created in 2002 out of the merger of Phillips Petroleum Co., which was founded in 1917, and Conoco, whichwas formed in 1929through the merger of Continental Oil and Marland Oil companies.

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