SK Corp. last week produced the first barrels from its new Group III base oil refinery in Ulsan, South Korea. Representatives said the company will ramp up commercial production and begin shipments – for markets including the United States – in coming weeks.
The 7,000-barrel-per-day plant began operating June 28, two days ahead of schedule, according to Joe Rousmaniere, general manager of Lithcon Petroleum USA Inc., which helps market SKs base stocks in the United States.
The new plant is SKs second Group III facility. The first, also located in Ulsan, has capacity to make 8,000 b/d. Together, the plants make the company the worlds largest Group III producer.
SK first announced the new plant during the summer of 2002, pegging its price at $100 million. The company said at the time that the first plant was sold out, thanks largely to exports to the United States and Europe. It expected demand would continue to increase because of rising motor oil standards, such as the GF-4 passenger car motor oil specification scheduled to hit the market at the end of this month.
Since announcing plans for the second plant, SK has encountered competition from arch-rival South Korean refiner S-Oil Corp., which established 6,000 b/d of Group III capacity as part of an expansion of its Onsan plant in 2002.
Posted prices for paraffinic base oils in the United States were unchanged this week. Crude oil prices, which had dropped steeply recently, spiked upward due to pipeline disruptions in Iraq and financial problems at Russias biggest oil company, OAO Yukos. The price of crude on the New York Mercantile Exchange closed yesterday at $39.51 per barrel, $3.79 higher than a week ago.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.