Closure of [the base oil plant] will require negotiations with our customers, as we do have some supply obligations, spokesman Andrew Turpin said yesterday. The status of these negotiations is confidential…. We have not disclosed the timing of closure at this stage.

The Stanlow base oil plant has capacity to make 5,060 barrels per day of Group I stocks. It is part of a fuels refinery that Essar bought from Shell last year. Essar has no lubricant operations, but leading up to the refinery sale said it expected to enter an agreement to supply Stanlow base oils to Shell, which operates the lube blending plant in Stanlow.

As Turpin explained, however, base oils do not fit into Essars overall larger business plan, which focuses on fuels. In fact, the base oil plant gets in the way because it requires sweet, waxy feedstock in order to optimize output.

The rationale is straightforward, Turpin said. Although base oil production comprises only 1 to 2 percent of the total output at our Stanlow refinery, the requirements of lubricants are quite demanding, and this dictates the choice of crudes for 25 percent of our total intake of crudes.

Closing this production will enable us to widen the range of crudes we process, including allowing us to process some lower cost alternatives as well as feedstocks such as atmospheric residues and condensates.

Essar did not identify the customers of the base oil plant. Turpin did say that whenever the plant closes that event will not result in layoffs.