Indias Bharat Petroleum Corp. on Saturday christened a new base oil plant at its refinery in Mumbai with capacity to make 3,500 barrels per day of Group II-plus stocks. Observers called the project a big step for Indias lubricant market, saying it will help fill a shortage of highly refined oils.
Currently, Group II and Group II-plus base oils are imported into the country from South Korea, the United States and Singapore, said Geeta Agashe, director of Kline and Co.s Petroleum and Energy Practice. The oils that Bharat Petroleum makes will provide a challenge to these imports.
The Mumbai facility is Bharats first base oil plant, although its joint venture with Oman Oil Co., Bharat Oman Refineries Ltd., has announced plans to build another plant. Bharat said its plant cost Rupees 3.7 billion (U.S. $80 million) to build and that it undertook the project primarily to provide an in-house source of supply.
The introduction of these Group II-plus base oils will ensure a quantum jump in the quality of Mak lubricants, the company said, referring to its own brand.
A senior spokesman told Lube Report yesterday that Bharat expects to use roughly 1,900 b/d of the plants output to make its own lubricants. Most of the remainder would be sold to other blenders in India, although a portion will likely be exported. The company said the infrastructure needed for exports is already in place. The spokesman, who commented on condition of anonymity, added that the plant has an advantageous location since the western part of the country constitutes Indias biggest lube market.
India now has four base oil plants with combined capacity of 18,950 b/d, but those facilities fall far short of meeting the countries needs. Kline, a consulting group based in Little Falls, N.J., estimates that the country imports upwards of 20,000 b/d, although that number includes transformer oils and white oils, which could be considered finished products.
This is a significant project, Agashe said. Its is like adding another 20 percent to capacity. If you look from a Group II/II-plus perspective, its even more significant. With the exception of 2,300 b/d at Indian Oil Corp.s Haldia plant, the rest of Indias capacity is all Group I. Kline estimates that imports of Group II and Group II-plus amount to approximately 2,900 b/d.
Industry insiders saw the plant christening as a sign that the Indian market is evolving. The country is the worlds sixth-largest lubricant consumer, and demand for higher quality lubes is growing rapidly.
This is further evidence of a fast-developing Indian market for lubes, said Naveen Gupta, managing director of Valvoline Cummins Ltd.
Bharat Oman Refineries Ltd. has said it plans to build a new refinery, including a base oil plant, in Mumbai by 2009. Financing for that project has not yet been identified, though.
– Contributing Editor Hutokshi Rustomfram in Mumbai contributed to this article.