But conference attendees, most from the Middle East or South Asia, were disappointed to hear that output from the plant is not available in the region and may not be for awhile.

The Sitra plant is a joint venture between Finnish refiner Neste, Bahrains National Oil and Gas Authority and Bahrain Petroleum Co., the countrys national oil company. Bapco operates the plant while Neste handles marketing.

The facility has capacity of 400,000 metric tons per year and is part of a big shift in Middle East base oils. Until the middle of last year, virtually all of the regions capacity was for conventional Group I oils. Then Shell and Qatar Petroleum opened the first of two trains at their mammoth gas-to-liquids Group II/III plant in Qatar, and that was followed a few months later by Neste-Bapco. More Group II and III projects are underway, meaning the Middle East is quickly becoming a large supply center for highly refined base stocks.

All along, Neste has said it intended to sell the plants output in other regions, at least initially. Demand for Group II and III is greatest in Europe, North America and Japan, where modern automotive engine oils – along with a growing number of other types of lubricants – require Group II or III base stocks.

Neste is following through on those plans. Market Development Manager Juha Wallius told the conference the company is indeed sending oils to other regions. Some members of his audience asked when they would be made available in the Middle East, indicating they would like the opportunity to purchase.

At the moment, Wallius said, supplying within the region is logistically difficult because Neste lacks a distribution network here. He did say that the company intends to develop a network but added that Nestes focus will remain elsewhere.

The Middle East will likely remain a Group I market for now, he said.

Several attendees complained privately about the lack of accessibility to the regions new high-grade oils. Throughout much of the region, they noted, car populations are growing, and many of the new vehicles are Japanese, U.S. or European models that need modern lubricants. Local mar-keters would like to compete for this business, but they say they still must import Group III from other regions, even as local cargoes are leaving.

Apparently Middle Eastern companies may not derive much early benefit from the regions new Group II and III capacity. On the other hand, as demand here continues to grow, at some point suppliers will find it advantageous to sell their base stocks in the area, provided its blenders pay competitive prices. Nearby sales will reduce transportation costs, and that should benefit everyone.