There are ongoing procedures for settlement of the [plants] debts and subsequent resumption of PAO and finished oil production, Gabbas Ilyasov, the companys deputy director for development told LubesnGreases. More details on the production resume timeline will be available [soon].

The 10,000 ton per year PAO plant, the only such facility in Russia, is owned by Tatneft-Nizhnekamskneftekhim-Oil, a 74-26 joint venture between Tatarstans oil major and Nizhnekamskneftekhim, a chemicals company. It includes a blending plant where the company produced semisynthetic and synthetic motor oils and other synthetics such as vacuum and compressor oils.

Due to the lack of linear alfa olefin feedstock from the nearby Nizhnekamskneftekhim chemical complex, the PAO plant halted operations in 2010. A few years later, after it spent its backlog feed and accrued debts to its parent companies, it stopped finished lubricant production as well. What we are looking at now is 2014 at the earliest or 2016 at the latest when the creditors [Tatneft and Nizhnekamslkneftekhim] would start to pay off the plants debt, a Nizhenkamskneftekhim official said.

Supply problems for the U.S. $49 million plant began in 2005, when the parent company increased feedstock prices. The plant ran up debt and experienced losses because the noncompetitive prices of its finished products ultimately led to a production halt. In addition, the engineering company made plant construction design mistakes and Tatneft had to invest more than 75 million rubles [U.S. $2.1 million] to fix the mistakes, the official said.

In 2013, the plant was put on tender twice. Tatnefts Nizhnekamsk refining complex Taneco expressed an interest in buying it, but bidding was unsuccessful because of lack of competitive bidders. Both parent companies realized that the PAO plant could become profitable as the demand for high quality base stocks increased in Russia in the last couple of years. Therefore, they decided to revamp it and restart production. The plants management looks forward to expanding its product portfolio with API Group III base oils.

The production expansion could cost an additional 450 million rubles, Ilysov said. Besides synthetic products based on PAO, we are planning to use the Tanecos Group III base oil to produce high quality automotive and industrial lubricants, Ilyasov said.

The Taneco refinery hydrocracking unit started streaming earlier this year. Its base oil plant is set to commence production of 90,000 t/y of Group II and 100,000 t/y of Group III base oil at the beginning of 2015.

Baumann Heads Brookfield Germany

Brookfield is has appointed Gerhard Baumann as Managing Director for Brookfield GmbH in Lorch, Baden-Wuerttemberg. This office manages sales and service for customers in Germany. Baumann has worked for various companies in the chemical industry, most recently managing a laboratory equipment company.

Infineum Opens Singapore Salicylate Plant

Infineum opened a salicylate plant at its Jurong Island site in Singapore. The plant will manufacture calcium salicylate, a detergent additive for passenger car, heavy-duty and marine lubricants. Cost of the project was U.S. $150 million.

The new salicylate facility represents the companys largest investment since it was formed in 1999. It will employ an integrated manufacturing process in which computer-automated operations and in-line systems govern the various equipment functions.

BASF to Build PAG Plant

BASF announced the construction of a new plant for polyalkylene glycol based lubricants at its Ludwigshafen, Germany, site. The facility will start operations by the beginning of 2016 and produce PAG lubricant base stocks and formulated blends.

Cost of the plant was not disclosed although it is in the double-digit million euro range. The new production unit will have full backward integration into all key raw materials including ethylene oxide and propylene oxide. PAG base stocks are used in finished lubricants for gear or compressor oils as well as in metalworking applications and fire-resistant hydraulic fluids.

Nigeria Shuts Down Illegal Blending Plant

Nigerias Department of Petroleum Resources shut down an illegal lubricating oil blending plant in Usubu village, near Kontagora in Niger state. The agency said Nigerias security forces also arrested the factory manager and two other workers at IMI Auto Parts Ltd.

The departments Information Officer, Mohammed Saidu, said the company was operating without a license and in unsafe conditions, endangering the lives of the workers by exposing them to dangerous chemicals without protection and formal training. Saidu also said that an investigation will be made to determine the source of the companys raw materials.

Safor to Close South Africa Base Oil Units

Safor will close its 155,000 tons per year API Group I base oil unit in Durban, South Africa, on 31 July. According to Chevron, which holds a 34 percent stake in the refinery, the closure is due to declining demand and increasing production costs for Group I base oil.

After the shut-down, South Africa will have only one Group I plant, the 3,300 barrel per day Sapref facility in Durban, a Shell/BP joint venture. South Africa has been preparing for closure of its base oil plants by building storage capacity to accommodate imports.

Shell Lubes to Expand in Egypt

Shell Egypt will increase capacity of its lubricants blending plant near Cairo by more than 100 million liters per year by 2017, an official said. The fully-owned Shell plant will increase capacity by double digits [percent] in an incremental three year period, Shell Egypt Lubricants sales manager Saher Hashem said. Shell did not disclose the plants current capacity or the costs of the expansion project but noted that the investments will also be incremental.

The expansion will result in more storage space both for raw materials and finished lubricants, as well as new filling lines, blending lines and packaging capabilities. The plant produces the Shell Helix range of motor oils, which includes Shell Helix Ultra fully synthetic motor oils along with heavy duty diesel engine oils marketed under the Shell Rimula brand, as well as other industrial lubricants and greases.

Shell is expanding to meet the existing demand of the local market, Shells spokesperson continued, noting that the company is looking to increase its share of the nations lubricants market.

Fuchs Announces Acquisitions, Board Change

Fuchs Petrolub SE has acquired the lubricants business of Lubritene and Lubrasa in South Africa and Australia and will integrate them into their local companies. Lubritenes product range complements the lubricants portfolio of Fuchs mining business; Lubrasa adds to Fuchs product portfolio for food grade applications in Southern Africa. The transaction is subject to approval by local competition authorities.

The company also announced that Georg Lingg will leave Fuchs in the middle of this year. After 19 years with the company and ten years on the Board of Directors, he will seek new challenges outside the lubricants industry.

Lukoil Tables Base Oil Upgrades

Lukoil delayed plans to upgrade its base oil plants, in deference to a growing oversupply of API Group III oils. Given the current conditions of the global market, we are not proceeding with these plans at this time, Maxim Donde, general director of Lukoil lubricant arm LLK-International, told the ICIS Indian Base Oils & Lubricants Conference in Mumbai April 29.

For several years, the Russian energy giant had said it intended to expand and upgrade at least two of its three base oil plants in Russia. As recently as last year, the company said it would increase Group III capacity at its Volgograd plant by 240,000 metric tons per year by 2017. The Volgograd plant currently has capacity to make 30,000 t/y of Group III and is the only Russian base oil plant currently capable of making anything other than Group I oils. The company had also said it intended to introduce 350,000 t/y of Group II and II+ capacity to its Perm plant by 2019.

Lukoil rethought those plans in light of the current excess of Group II and III base oils. A large number of large Group II and III projects have come online the past several years, and more are in the works. Analysts and suppliers agree that demand for those grades will eventually catch up, but prices have taken a hit, and most agree that the surplus will persist for a number of years.

Donde said Lukoil believes it can turn that situation to its advantage. The company will need Group II and III oils to make its finished lubricants, but is willing to buy them from others. Better to be a buyer in a buyers market, he said.