Panel: Shift to Group II Difficult for Africa

Share

JOHANNESBURG – African lube markets will resist shifting from API Group I to Group II base stocks because of formulation challenges and lack of consumer education, speakers told an industry conference here last week.

The panel discussion took place during the Argus Africa Base Oils and Lubricants Conference on June 24.

Mary Mwangi, special projects manager for lubricants blender and distributor KenolKobil of Kenya, identified the reliance on additive suppliers for formulation as a critical challenge to the transition from Group I to Group II.

There must be liaison between the base oil suppliers and additive manufacturers because we dont have the capability to make the formulation, which will mean that there will be a new formulation using Group II base oils, said Mwangi

For instance, Mwangi said consumers in East Africa are price sensitive, which she noted, is a determining factor for the shift to Group II. If there is any price differential, it would be very hard to market these products to the customers who dont understand anything about quality.

Linus Ilozue, managing director of A-Z Petroleum, concurred that for Group II to be accepted in the African lubricant market, there have to be economic and quality justifications.

At the moment, I dont see any justification for Group II. A lot of people are not convinced that Group II will give them better performance than Group I, said Ilozue. Most blenders in Nigeria dont import Group II but only Group I because that is what sells in the Nigerian market.

David Adams, senior base oil trader, Optima Energy, Switzerland, agreed, saying, Nigeria is a very price-sensitive market. The last drop of Group I that will come off of the refineries will go to Nigeria.

For Emmanuel Ekpenyong, head of lubricants for Honeywell Oil and Gas Ltd. in Nigeria, It is going to take a very long time before there will be a total shift from Group I to Group II in Africa.

On the other hand, Adams said Ergon and Nynas have been predicting the extinction of Group I, but he contended, Group I base oil is here to stay for the foreseeable future.

However, the panel speakers agreed that educating consumers about lubricant quality is critical to the transition from Group I to Group II base oils.

Adams concurred that educating the consumer has always been key in this market because it is often very difficult to blame equipment failure on low quality lube. Consumers prefer to blame it on mechanical faults.

While Mwangi agreed that educating consumers will speed up the transition, she argued that putting so much reliance on auto technicians, who are not educated, poses a greater challenge to consumer education.

However, she added that Group I will remain dominant on the African continent as long as it remains on the market, unless it is no longer refined.

Adams said, As long as there is bright stock, there will always be Group I on the market.

Related Topics

Africa    Base Stocks    Region