The companys base oil assets are currently limited to its 6,500 barrel per day API Group III refinery in Melaka, Malaysia, and its half interest in a 3,000 b/d Group I Durban, South Africa, plant operated by Engen. (Petronas owns Engen.) These base oil activities are now part of Petronas Lubricants International (PLI), with merchant marketing handled by Petronas Marketing Netherlands under Hans Groen.

Consequently, Petronas has tasked Rousmaniere to head a new department of Base Oil Strategic Development. Im a base oil futurist, looking out five to 10 years, to take care of PLI and to look beyond, he said.

There are three certainties in base oil forecasting, Rousmaniere asserted. First, specifications for gasoline and diesel engine oils are constantly being upgraded. There will be an ACEA 2012 and an ACEA 2016, a GF-6 and a PC-11. Theres an inexorable march of quality driven by reduced emissions and better fuel economy, and top-tier base oil must continue to improve.

The second certainty is the flood of new Group II and III base oils over the next eight years. Some announced plants may not come in, but others including some yet to be announced will be built. Rousmaniere predicted that another 25 base oil refineries will open between now and 2020, all Group II and III, adding 9.7 million metric tons of new production.

Third, said Rousmaniere, somethings got to close. Demand wont increase more than 2 percent a year. Certainly many closures will be Group I plants, but some Group II and III plants could also succumb.

Why will so many new base oil refineries be built? The answer, said Rousmaniere, is unrelated to the lubricants business. Rather, their role is to maximize the value of residual byproducts from fuels refining.

An example, he said, was Petronas 2006 decision to build its Melaka Group III plant. The existing fuel refinery was losing money on low-value products and had to find a way to change that. Taking low-value residual fuels and converting them to high-value base oils was a profitable solution and a resounding success. And many other refineries around the world have followed the same route.

Looking ahead, Rousmaniere continued, three quality levels of lubricants are of significant interest. The first is lower-quality, high-volume industrial lubricants, traditionally formulated using Group I base oils.

The second is mid-level oils, typified by service-fill engine oils made with Group II and III base oils. And the third and highest quality level is the lubricants that will need Group III+, IV, V and beyond.

We think theres more than enough Group II and III to meet mid-level needs for a long time. The areas of innovation are supplying the first and third quality levels, said Rousmaniere.

His proposed answer to replace the coming shortage of Group I is rerefined base oils. Rerefining is my biggest interest now, he continued. Over the past five years, several companies have essentially perfected the technology.

While emphasizing that Petronas has not yet approved moving into rerefining, Rousmaniere argued that the company could become a leader in Asia and possibly elsewhere. The hurdles in Asia are huge; everybody hates rerefined oil. They think its just recycled, he said. Rerefining success in Asia will need muscle to make it work, but one company in Indonesia is already doing it. We have the potential to become a major factor in rerefining.

Another strong interest is in the base oils needed to make tomorrows highest quality lubricants, beyond Group III+ and polyalphaolefins. We think bio material is the way to make these products, he said. We do love palm oil in Malaysia, but any bio matter can be used. Im vegetable neutral.

Petronas is looking at the possibility of producing base oils in every way possible, Rousmaniere concluded, including crude oil refining, gas-to-liquids, petrochemical plants, biochemical plants and rerefining. And the company is well positioned to meet the coming glut of base oils. Petronas is a net buyer of base oils, so it will be pleased to see surplus.