A third South Korean refiner is preparing to join the base oil business. GS Caltex is finalizing plans to build a 15,000-barrel-per-day plant at its oil refinery in Yeosu, an official told Lube Report this week. The company aims to begin operating the plant by the end of 2007.
Known until March as LG Caltex Oil, GS Caltex blends and markets lubricants but currently does not produce base oil. It has had ample opportunity to view the success of fellow South Korean companies, SK Corp. and S-Oil Corp., from whom it buys base oils. The desire to lessen its dependence on them is a factor in the plan to build its own plant, Senior Manager S.H. Lee said Monday.
The main reason is for our own internal use, Lee said. We will also supply Chevron, which does not have any base oil production in this region. The remaining volume will be exported to countries in Asia-Pacific.
GS Caltex is a 50-50 joint venture between Caltex, a subsidiary of Chevron Corp., and GS Holdings, the energy business spun off last year by South Korean conglomerate LG Corp.
Lee emphasized that the base oil project has not yet received final approval but said it is expected to be given next month. As contemplated, the plan calls for installation of a hydrocracker that would provide bottoms for feedstock, as well a dewaxing unit that would use Chevron Lummus Globals Isodewaxing technology and catalyst. Chevron Lummus is a joint venture between Chevron and the Swiss engineering firm ABB Lummus Global.
Chevron on Monday declined to comment on the project.
Lee said the plant will have capacity to make Group II and Group III stocks.
South Korea has two existing base oil plants – SKs 17,000-b/d plant in Ulsan, which makes mostly Group III stocks, and S-Oils 24,500-b/d Group II and Group III facility in Onsan. They have become the worlds dominant Group III suppliers, with strong demand in North America, as well as China and other parts of Asia-Pacific.
Yeosu is located in the central part of South Koreas southern coast. Earlier this month GS Caltex announced plans for a $1.25 billion upgrade of its refinery there.