Theyve increased their marketing [of finished lubricants] in recent years, while at the same time having shut down several base oil plants, and that has left them in a base oil deficit, said Stephen Ames, managing director of SBA Consulting LLC, in Pepper Pike, Ohio. He also noted that Petit Couronne is one of two plants, the other a joint venture in Yokkaichi, Japan, that produce Shells XHVI-branded base oils. Those base oils are Group III-plus quality and they are critical to a number of their top-tier lubricants, at least until Shells GTL plant comes onstream.

Shell and Qatar Petroleum plan to build a gas-to-liquids refinery in Ras Laffan, Qatar, including a 30,000-b/d base oil plant that would open in two stages in 2010 and 2011. Industry observers describe GTL base oils as performing nearly on par with Group IV polyalphaolefins.

This months Shell-Petroplus agreement also covers a second refinery, in Reichstett, France, which does not produce base oils. The companies still must hammer out details of a purchase agreement, and any transaction would be subject to regulatory approval, but management on both sides said they expect the sale to close during the second quarter of 2008. They have settled on a price – $875 million, including working capital (largely inventory) which is expected to be about $400 million.

The base oil plant at Petit Couronne has capacity to make 7,300 barrels per day – 6,300 b/d of Group I and 1,000 b/d of Group III. Shell has four other base oil plants in Europe, the next-largest being a 7,250-b/d facility in Pernis, Netherlands.

An Aug. 2 press release from Petroplus said it intends to enter an offtake agreement to sell Shell the base oil produced at Petit Couronne, along with the bitumen and approximately 30 percent of the gasoline and middle distillates from the two refineries. The statement said those products would be sold at market rates.

Shells announcement said the companies will discuss processing arrangements, but did not go into detail. Neither company responded to questions from Lube Report by the close of business yesterday.

Shell is based in The Hague, Netherlands, and is the worlds second-largest publicly held petroleum company. Petroplus is headquartered in Zug, Switzerland, and is Europes largest independent refiner and wholesaler of petroleum products, with five refineries and total throughput capacity of 625,000 b/d. None of those refineries makes base oil. Petit Couronne and Reichstett have combined throughput capacity of 220,000 b/d.