United Kingdom-based Technavio Research said that 90 percent of the transformer oils consumed globally in 2015 were made with mineral base oil, and that they yielded U.S. $1.8 billion in sales revenue. The firm estimates that revenue will grow at a compound annual rate of close to 9 percent to nearly $2.8 billion by 2020, constituting 91 percent of projected global demand.

Mineral-based transformer oils includes those blended with naphthenic and paraffinic base stocks. Technavio said the main factor driving this segment is the wide-scale use of mineral-based transformer oil in power and distribution transformers, switchgear and circuit breakers, especially in the Asia-Pacific region. This oil is reasonably priced compared to other forms and is, therefore, popular among the cost-sensitive customers in the region, Technavio said in a news release.

The company estimated the value of silicone-based transformer oils consumed in 2015 at $109.4 million and said they accounted for 5 percent of the global market. The research firm projected the segment would grow at a compound annual rate of almost 11 percent through 2020, reaching $180.2 million in revenue. That would account for 6 percent of the market. Silicone-based transformer oil is used in applications that prioritize fire safety and thermal stability, said Gaurav Mohindru, a Technavio lead unit operations research analyst.

The firm estimated the value of biobased transformer oils at $83.1 million in 2015, or 4 percent of the global market. That is estimated to increase by a compound annual rate of more than 11 percent to $141.3 million by 2020, though it will still constitute only about 5 percent of the global transformer oil market.

Biobased transformer oil is produced from vegetable oil feedstock, Mohindru said. It does not have impurities, such as petroleum hydrocarbons, silicones or halogens. In the event of leakage or spillage, the oil biodegrades quickly, and its nontoxic nature and higher fire-resistance may help this segment gain traction in the market. In addition, the rising demand for renewable energy sources from manufacturing companies is a major factor driving growth in this segment.

Global Transformer Oil Market 2016-2020 is available at www.technavio.com/.

Japan Scolds Britain on Brexit

In a brutally frank message to the British people, Japans Ministry of Foreign Affairs gave a detailed assessment of the potential economic damage of leaving the European Union. As reported by Reuters, the 15-page document lists specific concerns and demands.

The message emphasizes, There are numerous Japanese businesses operating in Europe, which have created 440,000 jobs. A considerable number of these firms are concentrated in the U.K. Nearly half of Japanese direct investment intended for the EU in 2015 flowed to the U.K. [W]e strongly request that the U.K. will consider this fact seriously and respond in a responsible manner to minimize any harmful effects on these businesses.

The note contains a series of requests from Japanese businesses, one of which says Japanese banks may leave if Britain cannot maintain an EU-like economic relationship. If Japanese financial institutions are unable to maintain the single passport obtained in the U.K., they would face difficulties in their business operations in the EU and might have to relocate their operations to existing establishments in the EU.

Read the full text at www.mofa.go.jp/files/000185466.pdf

KenolKobil, Castrol to Build Lube Plant

KenolKobil and Castrol announced a partnership to construct a U.S. $15 million lubricants factory in Mombasa, Kenya. KenolKobil said it sought the partnership because it provides a less costly option to importing the lubricants from South Africa.

KenolKobil currently imports Castrol lubricants from South Africa, incurring an import duty of 25 percent. The company is seeking to cut costs as it aims to strengthen its balance sheet.

Chief Executive Officer David Ohana confirmed the partnership, noting that construction is set to begin by mid-2017. Ohana said the factory will have a monthly output of 1,000 tons of lubricants and will strengthen KenolKobils standing in the local petroleum subsector.

JX, TonenGeneral Agree on Merger

JX Holdings and TonenGeneral Sekiyu KK have finalized an agreement to merge in April 2017 to become Japans largest oil refiner. Among midstream, downstream and energy ventures, the group said it expects lubricants to be one of its main growth segments in Asia.

The new entity, JXTG Holdings, Inc., will see TonenGeneral delisted and absorbed by JX Holdings subsidiary, JX Nippon Oil & Energy, according to a joint statement. The firms shareholders will meet in December to approve the integration, which is also subject to scrutiny by Japans Fair Trade Commission and other regulatory bodies.

The group initially planned to achieve 100 billion in improved profits by reducing distribution, manufacturing and procurement spending during its first five years, but now aims to hit that goal within three years. The group did not comment on plans for its respective base oil refineries, but noted that it would combine or close some of its manufacturing bases across its various segments.

JX Holdings has three base oil plants in Japan and claims about 32 percent of the countrys finished lube market. TonenGeneral produces base oil at its Wakayama refinery and holds approximately 8 percent of domestic finished lube sales. Both companies plan to continue marketing products under their respective brands after the merger.

ASTM Developing More Efficient Grease Test

A proposed ASTM International standard is aimed at creating a faster, simpler way to test the stability of lubricating greases. The test method could provide benefits such as using a smaller sample and providing results in a shorter time compared to other methods.

Specifically, the standard will test the oxidation stability of lubricating greases under accelerated oxidation conditions. This will help determine the longevity of the product. ASTMs Subcommittee on Oxidation of Greases is developing the standard.

Saudis, Russians Sign Oil Agreement

According to a CNN report, Saudi Arabia and Russia have signed an agreement aimed at stabilizing the oil market. The countries have pledged to set up a working group, along with other measures to support the market.

The announcement led to speculation that OPEC and other big producers would agree to freeze production, putting a floor under prices, which are still down more than 50 percent since 2014. However, CNN noted that critics feel any freeze would be mostly symbolic because OPEC is pumping more oil than ever before, and freezing production at extremely high levels wouldnt really help fix an oversupplied market.

An attempt to freeze production in April failed miserably. And any agreement could be undermined by Iran, which is increasing production after years of international sanctions.

BRB Opens Singapore Plant

BRB announced that it has opened its Viscotech Asia plant. This undertaking is a joint venture between Ban Guan Chemical, a wholly owned subsidiary of Malayan Daching and BRB Singapore Pte. Ltd.

This is BRBs first production joint venture in Asia and the company said it offers the opportunity for BRB to increase its flexibility in supply and a basis for future expansion. The plant will manufacture liquid viscosity modifiers, marketed under the Viscotech brand name.

Hi-Tech Starts Expanded Plant

Hi-Tech Lubricants announced that it started production at its expanded 30,000 metric ton per year lube blending plant in Lahore. Cost of the expansion was Rs1.91 billion (U.S. $18 million).

The plant will manufacture Zic engine oil previously imported from South Koreas SK Lubricants. The blending plant is a wholly owned subsidiary of the company, which is registered for commercial production by the Oil and Gas Development Company, said Hi-Tech Secretary Muhammad Imran.

The company said the plant is an integrated unit producing lubricants that meet international specifications in HDPE bottles. The expansion has allowed the manufacturing of jerrycans and drums from plastic for 18 to 210 liters of lubricants for industrial consumers.

Chevron Supplies Group II to Australia

Chevron will market API Group II base oils through a distribution agreement with Caltex Australia, joining the growing number of companies supplying highly refined base stocks down under. The arrangement comes five years after Caltex closed Australias last domestic base oil plant, a Group I facility in Kurnell. Caltex Australia will distribute Chevrons 100, 150, 220 and 600 neutral base oils.

With limited in-country production of premium base oils, this agreement will help meet tightening lubricant specifications by creating a de facto source of local supply while minimizing import complexities for lubricant formulators, Chevron said in a statement. Wai-Fong Chen, Chevron base oil product manager for Asia-Pacific, said in an interview that the base oils will be primarily imported from Richmond, California, in the United States; the companys joint venture plant in Yeosu, South Korea; and from storage in Singapore.

Currently, there is no local production of virgin Group II base oils in Australia. Caltex shut down its base oil refinery in Kurnell, just outside of Sydney, in 2011. It had been the last Group I plant operating in Australia after BP, ExxonMobil and Royal Dutch Shell ceased base oil production in the country between 2002 and 2004.

Chevron Singapores distribution agreement with Caltex Australia will increase competition for supplying Group II against other importers, including Hilditch Pty Ltd. and Quality Logistic Services Australia. Hilditch imports Group II from the Shell-Hyundai joint venture in South Korea, Group III base oils from South Koreas SK Lubricants and bright stock from Thailands IRPC. QLSA imports and distributes Group I, II and III base oils from ExxonMobil.

Caltex Australias base oil distribution unit is separate from the Sydney-based businesss own lubricant division, which imports and blends finished products. Caltex is one of the top four suppliers of finished lubricants and greases in the Australian market.

Participation in European Quality System Rises

During the first six months of this year, 22 lubricant marketing companies signed a letter of conformance to confirm compliance with the European Engine Lubricants Quality Management Systems requirements, compared to 26 in the previous 12 months. ATIEL, the European lubricants industrys technical association, administers the system on behalf of the automobile, lubricant and lubricant additive segments. New signatories in 2016 include lubricant companies based in Argentina, China, Israel, Saudi Arabia, Singapore and Thailand, ATIEL said in a news release.

The system was developed jointly by ACEA (European Automobile Manufacturers Association), ATC (Technical Committee of Petroleum Additive Manufacturers in Europe) and ATIEL. It covers various quality standards, test methods and procedures, together with industry codes of practice and the requirements of the ACEA European Oil Sequences. ACEA requested that each company signing the letter of conformance declare a list of all lubricant product brands that are covered by the letter, to provide greater transparency and assurance for consumers. Lubricant marketers will be required to provide that information to ATIEL as part of the renewal process for their letters of compliance later this year.

Tianhe Expands to Middle East

Chinese additive manufacturer Tianhe Chemicals has launched a facility in the United Arab Emirates. G.S. Ravi, CEO of the firms lubricant additive division, said that Tianhes new plant in Dubai began streaming in late August with a capacity of 30,000 metric tons per year and the capability to expand to 35,000 t/y. The plant will supply various performance additive packages mainly to the Middle East, along with a portion to India

Tianhe will also partner with a toll blender based in Singapore to start production there at the end of the first quarter of next year, Ravi continued. The plant will have capacity to produce 40,000 t/y of industrial and automotive lubricant additive packages, which it will supply mainly to Southeast Asia.

Tianhe Chemicals, which claims to be the largest Asian lubricant additive manufacturer, is headquartered in Jinzhou, in the northern coastal province of Liaoning. The company markets additive components such as zinc thiophosphates, ashless dispersants, detergents, extreme pressure additives and additive packages for engine oils, gear oils and industrial lubricants.

Analysts Skeptical about Azeri Lube Production Plans

Azerbaijans economy ministry recently said state-sponsored Sumqait industrial park could include the construction of a lubricant blending facility, following on the heels of plans announced by a state investment promotion fund to build an API Group II/III base oil plant at the same location. Some market observers expressed doubts about the viability of the two projects.

Located near the capital of Baku, the park is ready to house a dozen companies that have already been approved by the government to invest hundreds of millions of dollars in the Azeri oil and chemical industry. In a recent news release, the ministry said it presented Alco Lubricant Co. a certificate to build a U.S. $10 million lubricants blending plant with capacity to produce 30,000 tons of finished products annually. The plant, to be built on a 6.2-acre plot, is expected to be fully operational by the end of 2017.

The Group II and III base oil plant has a planned capacity of 80,000 metric tons per year. The Azeri Export and Investment Promotion Fund suggested the project could be financed by private and state entities.

Some market observers with knowledge of the region are wary of such announcements because the projects could be politically motivated. And even if they come to fruition, observers said, they can only be pulled off through the involvement of state corporations and state money.

Shell Unveils New Lube Monitor Service

Shell Marine has updated its LubeMonitor service, a marine engine cylinder monitoring service that is based on a new software package called Marine Connect. The company says the software enhances data management and reporting functions. LubeMonitor runs in tandem with the Shell Rapid Lubricants Analysis that helps identify potential oil or equipment issues before they become critical.

Shell said in a news release that major original equipment manufacturers recommend cylinder drain oil analysis to monitor changes in the demands being placed on marine engines. LubeMonitor allows customers to evaluate Shell Rapid Lubricants Analysis data and data generated from the companys Onboard Alert magnetic iron analyzer and Shells Onboard Plus BN test kit, to help balance cylinder oil cost and engine reliability by optimizing feed rates.