The United Arab Emirates offer a warm welcome to the lubricant and base oil industries, and will move fast to API Groups II and III base oils in coming years, a local consultant says.
UAEs domestic lubricant market, excluding its important marine oil business, is about 141,000 metric tons per year, independent consultant T.R. Kumar told the ICIS Middle East Base Oils & Lubricants Conference in Dubai in October.
Looking at the local UAE lubes market, Kumar estimated that Abu Dhabi National Oil Co. has a market share of 25 percent, followed by Emirates Petroleum Product Co. (19 percent); Total (14 percent); Emirates Lubricant Co., ExxonMobil and Shell with 11 percent each; Emarat with 3.5 percent; and all others dividing the remaining 5.5 percent.
By product, the local UAE lubricant market is 35 percent heavy duty engine oil, 30 percent passenger car engine oil, 4 percent transmission fluids, with hydraulics and specialties making up the rest.
But UAE offers 1.25 million t/y of lubricant blending capacity, the highest of any country in the Middle East.
UAE blenders produce about 175,000 t/y of marine oils, some 7 percent of global marine oil volumes. Nearly 80 percent of this production is for export, Kumar noted.
UAEs Fujairah seaport is an ideal location for lube and fuel bunkering, Kumar said. It is the second largest marine fuel and lube oil bunkering, next to Rotterdam, and many crude vessels pass through the Strait of Hormuz and utilize Fujairahs services.
UAE is home to 32 of the Middle Easts 93 largest, established lube blending plants. This compares with 15 plants in Saudi Arabia, 12 in Iran, eight in Iraq, and five or fewer in other Middle East nations. Melubco, Adnoc, Enoc, Sharlu, Gulf Oil, Total, Elco and Gulfrak operate some of the largest Emirati blending plants.
In addition to blending, UAE is a main hub for base oil imports and re-exports in the region, Kumar said. And the Middle East is rapidly becoming a major center for high quality base oil production, with the Adnoc plant in UAE, Bapco in Bahrain, Shell/Qatar in Qatar, and soon Luberef in Saudi Arabia producing API Group II and III base stocks, mostly for export.
Irani base oils, Kumar noted, arethefactor for UAE excelling as a base oil import-export hub.
UAE blenders are turning increasingly to Group II and III base oils. Today, manufacturing multigrades is cheaper than monogrades, he noted. Technical factors favor switching to Groups II/III for automotive, industrial and even some marine oils, Kumar insisted.
Likewise, commercial factors favor the shift to the Middle Easts abundant high quality and lower viscosity base oils. Group II/III base oil prices are almost comparable with Group I base oil, he said, and additive treat levels can be lowered.
But the shift to Group II/III base oils will face some challenges, including the fact that, in developing countries, oil businesses are controlled by government agencies and saddled with already built Group I refineries. In addition, without API read-across guidelines for Group III base oils, expensive engine testing is required.
Kumar predicted that UAEs local lube market, excluding marine oils and exports, will grow from todays 141,000 t/y to 173,000 t/y by 2018. UAE is a favorable destination to do lube business, he concluded. Perhaps, he speculated, UAE will host a Lube Park similar to Singapores by 2015 or 2020.
