Asias lubricant industry received a bit of relief this spring for its chronic base oil shortage, as one refiner completed an expansion and another opened a small facility.
More help is on the way, though – lots more. Twelve projects are scheduled to be completed in Asia and along the Pacific Rim within the next five years, with a whopping 115,000 barrels per day of combined capacity. Even if some of those plans fail to reach fruition, it ought to be enough to encourage the regions thirsty blenders.
Asia-Pacific has for years consumed more base oil than it produced, forcing blenders to depend on imports from other regions. Finding those barrels became more difficult the past year or two, as a variety of disruptions crimped supply in Western Europe and North America.
The situation improved slightly this year. In April, SK Corp. completed a 2,700 b/d expansion at its plant in Ulsan, South Korea. The following month Bharat Petroleum opened a 3,500-b/d Group II plant in Mumbai.
A slew of additional projects are lined up to join the market beginning next year, according to research by British consulting firm Pathmaster Marketing Ltd. and LubesnGreases magazine. China National Offshore Oil Corp. has said it plans to builda 7,700 b/d naphthenic plant in 2007. LukOil has said it will double Group III capacity – currently 500 b/d – at its Volgograd plant. GS-Caltex plans to open a 15,100 b/d plant in Yeosu, South Korea toward the end of the year. The CNOOC and GS-Caltex facilities will be the first base oil plants for those companies.
Fully half a dozen projects are scheduled to come online in 2008, including the worlds first large-scale gas-to-liquids base oil plant, an 8,000 b/d joint venture between Sasol Chevron and Qatar Petroleum. The principals say the facility,part of a new refinery in Ras Laffan, Qatar, will open early in the year.
Pertamina and Petronas have projects slated to open mid-year 2008. Indonesias national oil company has a joint venture with SK to build a 7,000 b/d Group III plant in Dumai, Indonesia, while its Malaysian counterpart plans a 6,500 b/d Group II/III facility in Melaka, Malaysia.
Two Taiwanese companies say they will open Group II plants sometime during 2008 – Chinese Petroleum Corp. a 5,000 b/d facility in Ta-Lin, Formosa Petrochemicals a 9,000 b/d plant in Mai-Liao. Neste Oil Corp. and Bahrain Petroleum Co. have agreed to build an 8,100 b/d Group III plant in Manama, Bahrain.
Bharat Oman Refining has a target date of 2009 for opening a 3,500 b/d Group II plant in Mumbai. Another GTL project – this one a joint venture between Shell and Qatar Petroleum – is scheduled to open late that year or early in 2010. It is designed with capacity of 9,600 b/d and would also be built in Ras Laffan.
Mangalore Refining says it will open a 5,000 b/d Group III plant in its namesake city in 2010. The biggest announced project of all – ExxonMobils 30,800 b/d GTL joint venture with Qatar Petroleum – is scheduled to open the following year, of course inRas Laffan.
The Asia-Pacific projects far outweigh capacity gains announced for the rest of the world combined. Calumet Specialty Products plans an expansion of approximately 6,000 b/d at its Shreveport, La., plant during the second half of 2007. Total has been considering a 10,000 b/d expansion at its plant in Gonfreville, France, but has yet to make a final decision.
It remains a distinct possibility that some of the plans announced for Asia-Pacific may not be completed on time or ever. The Bharat Oman project, for example, is supposed to be part of a grass-roots refinery that has not yet been financed. The joint venture itself acknowledges odds are high of the target date slipping. Some industry observers speculate that only one of the Taiwanese plants will actually be built.
With so much capacity in the wings, however, it seems safe to say that lubricant blenders in the region will find it easier to obtain the base oils they need.