Cartagena Opens for Business


ALICANTE, Spain – Repsol and SK Lubricants are ready to launch commercial production at their new API Group III base oil plant in Cartagena, Spain, both companies said at an ACI conference here last week.

The plant operator is Iberian Lubricants Base Oil Co. (Ilboc), a 70-30 joint venture between South Koreas SK Lubricants (SKL) and Spanish oil major Repsol Petroleum. The plants 630,000 metric tons per year Group II/III base oil production capacity makes it the largest such facility in Europe. Lube Report participated in a group press tour of the facility on Sept. 16.

Ilboc will offer SKLs Yubase-branded products starting Oct. 1. The base oil plant is ready to commence full scale manufacturing in the next couple of weeks, Ignacio Covian Sanchez, Repsols commercial manager, lubricants and specialties division, told the ACIs European Base Oil and Lubricants conference in Alicante, Spain, last week.

Other plants in Europe capable of producing Group III base oil – ExxonMobils plants in the United Kingdom and France, Totals Gonfreville plant in France, Lukoils Volgograd plant in Russia and Rafinerija ulja Modricas facility in Bosnia and Herzegovina – are all significantly smaller in capacity compared to the Cartagena plant. Nestes Porvoo plant in Finland has capacity to produce 250,000 t/y of Group III base oils.

Ilbocs 250 million project has one lube train with installed dewaxing, vacuum and hydrogen compressor units that use SKLs UCO technology. It can deliver 3 centiStoke, as well as 4, 6, and 8 cSt cuts. The plants maximum output is around 186,000 t/y of Group II heavy base oil and around 450,000 t/y of Group III base oils. This plant closes the circle in our production portfolio. As of now, we are the only company in Europe that can simultaneously offer Group I, Group II and Group III base oils, which gives us a great competitive advantage, Sanchez said.

In Cartagena Repsol also operates a 130,000 t/y Group I base oil plant. The company is investing in current Group I base oil production at its 110,000 t/y base oil plant at its refinery in Puertollano, Spain. After the modernization, the capacity was reduced to 80,000 t/y, according to a Repsol official. In April we erected a new vacuum tower there, and by 2017 we plan to start to produce hydrogenated Group I base oils in Cartagena too, Sanchez said. The Spanish lube maker can also offer extender oils, paraffinic low toxicity oils and paraffin waxes.

Cartagenas Group III base oil supply will replace the imported volumes SKL was shipping to Europe from South Korea and Indonesia.

Primarily it is designed for supply security of the European market, as the demand for synthetic products is expected to grow by 1.2 million tons between 2013 and 2023, Paul Kerwin, European sales manager for SK Lubricants Europe, told the conference, quoting Kline & Co. data.

Europe continues to lead the way for utilization of synthetics, while new motor oil specifications in North America and demand for fuel efficient vehicles in Asia will drive the demand growth for synthetics elsewhere, he added.

The market strategy behind Ilbocs venture assumes that not all slated Group III base oil plant projects would come to fruition to support this growth in use of synthetics. And if those plants do come to fruition [such as Tanecos project in Tatarstan, Russia] they have an approximate yield of 60 percent for the key 4 and 6 cSt grades, primarily used for engine lubricants, Kerwin said, indicating that tightness of feedstock supply and unavailability of OEM approvals for some base oil marketers exclude them from certain applications and make Group III base oil supply-demand balance not so straightforward as it seems. For its part, Cartagena could deliver around 400,000 t/y of 4 and 6 cSt grades, available now.

At least 60 percent of Repsols 30 percent share in the joint venture, equivalent to 210,000 t/y, is meant for the Spanish, Italian and French lubricant markets. The geographical position of the refinery, its auxiliary facilities such as newly build tank farm, as well as track filling stations and a jetty for land and sea shipments, provide an excellent opportunity for both companies to deliver base oil in the Mediterranean basin, to SKLs key Rotterdam storage and to Northern Europe.

The idea for creation of the South Korean-Spanish joint venture started five years ago, as the demand for higher quality lubricants used in Euro 5 and Euro 6 emission standard engines grew substantially in Europe, a Repsol official said in a presentation that took place at the refinery site. The companies reached a decision and signed an agreement for the plants construction in 2011.

At its Puertollano refinery site near Madrid, Repsol also operates a 120,000 t/y blending plant. It holds around a 20 percent share of the 350,000 t/y Spanish finished lubricant market, according to Antonio Portela Estavez, Repsols director for lubricants, asphalts and specialties.

SK Lubricants total Group II/III nameplate capacity was 2.6 million tons in 2013. It has a base oil plant in Ulsan, South Korea, and a plant in Dumai, Indonesia, operated through a joint venture with state energy company Pertamina. The Cartagena plants capacity brings the companys total production capacity to 3 million tons, which SK Lubricants Kerwin claims makes it the worlds largest Group II/III marketer.

SK Lubricants is part of SK Holdings, which is South Koreas largest oil refiner and third biggest conglomerate in terms of total assets, with businesses in telecommunications, services, engineering, technology and energy sectors.

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