Turkish lubricant supplier Seahorse Petrochemicals began construction last year on a lubricant blending plant designed for capacity to produce 600,000 metric tons per year of finished lubes. No, that is not a typographical error. The plants capacity will be 600,000 t/y.
By itself the number is impressive. According to Seahorse, it would make the facility one of just five mega plants in the global lubricants industry. Scheduled to open in 2015, it will be the largest single lubricant source in Europe and will be more than twice as large as some big blending plants.
To truly put the size of the project into perspective, though, consider this: 600,000 t/y is approximately one third larger than Turkeys total lubricant demand. And Turkey is a relatively large lube market – 18th largest in the world, according to Fuchs Petrolub AG.
Can an investment of this size (Seahorse says the plant will cost U.S. $140 million, or 103 million) really make sense? Can the company reasonably expect to fully utilize it? Doing so, it appears, will depend on two things: first, gaining economies of scale that allow it to produce on a very competitive cost basis; and second, selling lots of lubes overseas.
Seahorse claims that the facility will indeed be efficient. Located on 85,000 square meters in the industrial city of Gezbe, 50 kilometers east of Istanbul, the facility will have three process reactors, each capable of making 100 tons of lubricants per hour. Officials said it will have cutting edge filling lines and spacious shipping facilities including loading bays for 30 trucks plus four tanker filling lines. An in-line grease plant will have capacity of 10,000 t/y, making it the second-largest grease plant in the world, Seahorse claims.
The company cannot depend on domestic sales to utilize the new plant, a fact that is especially obvious given its current market share. Seahorse, which currently operates a 150,000-t/y plant, says it believes itself the largest producer of lubricants and car care products in Turkey. Industry analysts, however, do not list it among the top suppliers of Turkish domestic demand. Kline & Co. consultants estimates that Istanbul-based OPET has the sixth-largest share of Turkeys lube market, with 6 percent.
Seahorse clearly recognizes the importance of exporting. Officials said the company currently has sales in 66 foreign countries but aims to increase that number to 100 by 2020. Targeted areas appear to be mostly in Europe, Asia and Africa.
If Seahorse comes even close to meeting its goals, it will have an impact on other lube suppliers. Global lubricants consumption increases at a slow pace, so one supplier cant grow that much without taking sales from others. A plant this large deserves the industrys notice.