CNOOC Builds Group II/III Plant


China National Offshore Oil Corp. is entering the paraffinic base oil market. The state-owned oil giant has broken ground on a 400,000 metric ton per year (7,700 barrel per day) API Group II/IIIplant in Huizhou, in southern Chinas Guangdong province.

CNOOC announced the ground breaking at ICIS/C1 Energys China Base Oils & Lubricants Summit in Guangzhou earlier this month. According to sources at the meeting, the plant will produce three grades of base oils: 200,000 t/y of 220 neutral, 140,000 t/y of 100N, and 60,000 t/y of 60N, using Chevron’s lubetechnology.

Jay Rogers,licensing manager for Chevron Lummus Global in Richmond, Calif., confirmed that the new plant will use Chevrons trademarked Isodewaxing and Isofinishing technology. The new CNOOC plant has the capacity to make Group II, II+ and III, Rogers told Lube Report, but my expectation is that they will emphasize II and II+.

The base oil plant, which CNOOC claimed will be completed in 2010, is an expansion of a new CNOOC fuels refinery in Huizhou. The hydrocracker that will provide feedstock for the lubes unit hasnt started up yet, Rogers said.

Output from the new base oil plant is likely to go into Chinas domestic merchant market, as CNOOC is not currently in the finished lubricants business.

Were excited to work with CNOOC on this project, Rogers added; it ishis companys first with the Beijing-based CNOOC. Chevron base oil technology is used at PetroChinas Daqing plant, which opened in 1999, and at Sinopecs ShanghaiGaoqiao plant, which started up in 2004.

According to consultancy Kline & Co., Little Falls, N.J., there is currently a global glut of Groups II and III base stocks. In 2007, global Group II supply exceeded demand by 27 percent, and global Group III supply exceeded demand by 66 percent. “The most compelling factor driving Group II/III plant growth, despite the existing surplus,” Kline’s Milind Phadke said, “is the attractiveness of the return on capital employed for a new Group II or III plant … thanks in part to the value of byproducts [including diesel], particularly in the current environment of high crude oil and fuel prices.”

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