Flint Hills Resources has begun posting prices for its Group II base oils and says it is expanding the number of customers with which it contracts.
We are now putting contracts in place with blenders who are looking for an independent supplier to help them meet the new [engine oil] specs, Director of Base Oil Marketing Dan Bradley said yesterday. We are letting blenders, including independents, know that we are in a position to talk to them about supply of Group II.
Bradley said Flint Hills is developing more contracts in order to broaden its base of regular customers and to reduce the amount of oil it sells on the spot market.
A subsidiary of Wichita, Kansas-based Koch Industries, Flint Hills entered the base oil market in August when it bought a 50 percent stake in Excel Paralubes from Shell Oil Products US. Excel Paralubes is a joint venture with ConocoPhillips that operates a 21,700-barrel-per-day base oil plant in Westlake, La.
Bradley declined to discuss the amount of base oil Flint Hills is or will be selling to Shell, which divested its stake in Excel Paralubes to comply with a condition that the U.S. Federal Trade Commission placed on Shell’s 2002 acquisition of Pennzoil-Quaker State. Pennzoil-Quaker State was an original partner in the joint venture.
Because Pennzoil-Quaker State used most of its half of Excel’s output in its own motor oils, the FTC told Shell at the time of the divestiture that it could enter a year-long supply agreement with Flint Hills, but not longer. That restriction did not prohibit Flint Hills from supplying Shell beyond one year, but rather was meant to keep Shell from tying up that source as a condition of the sale of its stake in Excel.
Posted prices for paraffinic base oils in the United States were unchanged this week. The price of crude on the New York Mercantile Exchange closed yesterday at $37.46 per barrel, up $1.06 from the previous week.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.