On Track: Hyundai-Shell’s Group II Plant

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A new player is scheduled this year to join the ranks of South Korean base oil suppliers. An API Group II plant under construction by Hyundai Oilbank and Shell is due to be finished in the second half of 2014, and could come onstream in September.

The plant is located at Hyundai Oilbanks refinery in Daesan, South Chungcheong Province, South Korea. It will have capacity to make 650,000 metric tons of base oil per year (13,000 barrels/day).

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We cant yet predict the exact date commercial product will enter the market, but it will be shortly after mechanical completion of the plant, Hyundai Oilbank spokesman Soo-Hee Kim told Lube Report last week, stating that construction is scheduled to be completed during the second half. Sources familiar with Hyundais operations said that the base oil unit is likely to start up in September.

Hyundai Oilbank holds a 60 percent stake in the facility, which broke ground in January 2013, and Shell will own the remaining 40 percent. The plant will make several Group II viscosity grades, including 60 neutral, 150 neutral and 500 neutral.

The joint venture, originally launched in early 2012, aims to address Asias growing demand for high quality lubricants, which is driven by the regions expanding automobile use and thriving construction and industrial activity, especially in countries such as China and India.

Hyundai Oilbank said that most of the output from the new plant will be exported through Shells distribution network to other Asian countries – mainly China. Some will also be used to supply the companys finished lubricants manufacturing plants.

Last year, Hyundai Oilbank launched its XTeer brand automotive engine oil. The company also plans to market engine oil for heavy equipment and industrial machinery.

The new unit in Daesan will be Shells fourth base oil plant in Asia, as the producer also operates others in Singapore, Taiwan and Japan. Shell also runs a network of 19 lubricant blending plants in the Asia-Pacific region.

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