The relatively recent arrival of Group II base oils has won the favor of many in the blending fraternity, who identified these grades along with complementary additive options as an optimum solution for meeting rising finished lube specs.

However, most European, Middle Eastern and African blenders historically chose to combine Group I material with Group III grades, to manufacture higher performance lubricants.

Europes traditional Group III producers include ExxonMobil in France and the U.K., Shell and Total in France, and others. But most of these older plants produced relatively small streams of Group III – their Group III capacity generally ranged from 9,000 to 75,000 tons per year. And much of their production was targeted for internal use.

With a large degree of far-sightedness, Neste started producing these grades for the merchant market from their 230,000 t/y refinery in Porvoo, Finland. Its volumes of hydrocracked material were readily accepted by the Northwest European market, which previously relied on Continental suppliers and on Koreas SK Lubricants and S-Oil.

Under new Russian ownership, in 2008 a unit was added to a 56-year-old refinery at Modrica in Bosnia and Herzegovina to produce Group III base stocks. The 52,000 t/y Group III unit was originally built as a source for the Optima Group to produce their new range of finished lubricants for the Mediterranean, Balkan and Eastern European markets.

As demand for Group III base oils has continued to grow throughout this region, the Modrica refinery was added to the small number of Western European suppliers of high viscosity index, hydro-cracked oils which can be used with Group I material to achieve the new standards required in the modern lubricant market. This meant new opportunities, not just to market finished lubricants, but also to sell base oils to blenders who could not access enough of this type of material to properly develop their ranges of products.

Unfortunately, the Modrica refinery is landlocked, hence transportation is by road tanker. A recent innovation is the loading of flexibags in containers for trans-shipment through the port of Ploce.

The relatively limited supply of regionally grown Group III base oils – a total of less than 500,000 tons of annual capacity, including Porvoo – opened doors for S-Oil and SK Lubricants from Korea. They have imported bulk cargoes of their material into satellite distribution points such as Rotterdam and Antwerp, and either resold directly through appointed brokers, or traded through distributors within the European mainland.

Latest on the scene are the Group III products from Petronas in Malayasia, which imported bulk cargoes through Genoa in the Mediterranean and other storage in Northwest Europe. This company set up a direct marketing organization in the Netherlands to handle promotion and sales of its Etro-branded base oils throughout the European mainland.

Most of the available Group III base oils have viscosities of either 4 or 6 centiStoke, with options for 8 cSt material to become available as the market expands. One source at the Modrica refinery said that, within a year or so, they will produce five grades of Group III, starting with 4 cSt, and eventually introducing 5, 6, 8, and 10 cSt oils. Whether others will follow with this expanded range is not yet clear.

Currently almost all supplies of Group III oils, whether European produced or imported, are accounted for and sold out. There is clearly more demand from the European market, and blenders in Africa and the Middle East are looking at future purchases. Most Middle East demand for Group III is currently being met by Far Eastern producers, but this year will see a large new installation starting up in Bahrain.

This state-of-the-art 400,000 t/y Group III plant is 55-percent owned by the Kingdom of Bahrain and 45 percent by Neste Oil. Neste will market the products, and Bahrain Petroleum Co., or Bapco, will operate the production site.

The new plant has been constructed alongside the Bapco refinery at Sitra, and will utilize feedstock provided from that unit. The quality of feedstock is allimportant for the production of Group III oils, this being one of the major reasons for positioning this new plant in the Middle East Gulf region.

This plant will be able to supply much of the demand within the area stretching from Iraq and Kuwait in the north to Saudi Arabia and Yemen in the south. It is also intended that material from this source will find its way to Europe, since the market will still be short and prices attractive to producers.

Several other Middle Eastern projects are in the works that could add to the volume of Group III available to Europe. The Pearl gas-to-liquids joint venture between Shell and Qatar Petroleum is scheduled to begin making Group III in Qatar later this year, though Shell has not yet said if it plans to sell them on the open market. Neste is partnering with Takreer to build a 500,000 t/y Group III plant in the United Arab Emirates by 2013. Luberef plans to add 700,000 t/y of Group II capacity at its Yanbu refinery by 2015, and that output could offer an alternative to Group III for some blenders.

Group III base oil has a very secure future in the EMEA market, given the advancement of lubricants technology to limit emissions, and to bring lubrication entirely into the 21st century. Demand is growing, and prices are keeping pace with raw material costs, so financial returns are set to be acceptable for producers of this range of base oils.