Groups II and III on the Rise Globally

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Demand for highly refined base stocks is on the rise, and a variety of expansions and new plants – coming onstream this year and next – should greatly expand global capacity for API Group II and Group III, according to LubesnGreases new 2007 Guide to Global Base Oil Refining.

A 22-by-33-inch wall chart developed in cooperation with British consulting firm Pathmaster Marketing Ltd., the 2007 guide includes data on nearly 170 plants, listing location and capacity by grade.

This yearsguide estimates total global capacity at approximately 937,000 barrels per day, including about 23,000 b/d capacity from 17 base oil rerefiners, listed for the first time. Including rerefiners, the guide reports approximately 632,600 b/d of Group I, 182,400 b/d of Group II and 41,300 b/d of Group III capacity. Naphthenic plants have a combined worldwide capacity of 81,000 b/d.

More than 44,000 b/d of new Group II and III capacity and 15,000 b/d of new naphthenic capacity have been announced for late 2007 and 2008.

Recent capacity additions include Indias Bharat Petroleum Corp., which in May christened a new base oil plant – the companys first – at its refinery in Mumbai with capacity to make 3,500 b/d of Group II-plus stocks. Bharat said it undertook the project, which cost Rupees 3.7 billion (U.S. $80 million at the time the plant opened) to build, primarily to provide an in-house source of supply. At the time, a company spokesman said Bharat planned to use about 1,900 b/d of the plants output to make its own lubricants, selling the remainder to other blenders in India and devoting a portion for exporting.

China National Offshore Oil Co., commonly known as CNOOC, planned to open a new 5,750 b/d naphthenics plant at an existing refinery in Binzhou this month, in the coastal province of Shandong, China. The plants annual 300,000 metric tons capacity is expected to include about 80,000 tons of electrical transformer oil, 120,000 tons of process oils and 100,000 tons of aromatic extracts.

The base oil guide notes two upcoming expansions in the U.S. base oil market. In the fourth quarter of this year, Calumet plans to expand the Group II capacity at its Shreveport, La. plant by 6,000 b/d. On the naphthenics side, Ergon expects to expand its plant in Vicksburg, Miss., by 7,600 b/d in the fourth quarter of 2008.

Several new base oil plants are on the drawing boards for Asia, with an emphasis on Group II and Group III. The only one expected to begin operation this year – in late 2007 – is a new GS Caltex plant in Yeosu, South Korea, with 12,000 b/d Group II capacity and 3,000 b/d Group III capacity. Base oil plants expected to open in 2008 in Asia include Formosa Petrochemicals 9,000 b/d Group II plant in Mai-Liao, Taiwan, in early 2008; Pertamina-SKs new 7,500 b/d Group III plant in Dumain, Indonesia, in 2008; Petronas new 1,000 b/d Group II and 5,500 b/d Group III plant in Melaka, Malaysia, in mid-2008; and CNOOCs new 7,650 b/d naphthenic plant in Zhanjiang, China, in late 2008.

The 2007 guide reports a change in stated capacity for Chevrons Richmond, Calif., refinery, from 15,000 b/d in 2006 to 20,000 b/d. The company boosted the capacity through a combination of actual hardware changes and catalyst improvements, according to a Chevron official, and the gain reflected the accumulated efforts of several years.

Elsewhere in North America, ExxonMobil upped Group I capacity slightly at its Baton Rouge, La., from 14,000 in 2006 to 14,500 b/d.

The largest base oil plant in the world remains Motivas 40,300 b/d Group II plant in Port Arthur, Texas. In western Europe, the largest base oil plant is ExxonMobils 17,400 b/d Group I plant in Augusta, Italy.

The largest base oil plants listed in Asia remain S-Oils 24,500 b/d (500 b/d Group I, 15,000 b/d Group II and 9,000 b/d Group III) plant in Onsan, South Korea, and SK Corp.s 21,000 b/d (5,000 b/d Group II and 16,000 b/d Group III) plant in Ulsan, South Korea. Through expansion, SKs capacity figures are up from 3,900 b/d Group I and 15,800 b/d Group III on last years chart.

The 17 modern rerefiners listed include only those which use hydrotreating or solvent refining processes, and have capacities of 800 b/d or greater. Among the largest listed are Safety-Kleens 3,500 b/d Group I plant in East Chicago, Ind.; and Mineraloel Raf. Dollbergens 2,350 b/d Group I plant in Dollbergen, Germany.

After the 2007 guide went to press, LLC Neft-Aktiv – subsidiary of Russian state-controlled oil and gas company Rosneft – acquired Group I base oil plants of 4,900 b/d in Angarsk and 3,300 b/d in Novokuibyshev, Russia, through bankruptcy auctions of the assets of oil refiner Yukos Oil Co.

For information on ordering the 2007 Guide to Global Base Oil Refining, visit http://www.lngpublishing.com/base.htm.

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