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Base Oil Report


Around the time readers receive this issue, Motiva is scheduled to wrap up a maintenance turnaround on a production train at its base oil plant in Port Arthur, Texas. The unit in question is one of three at the plant, and one of two that existed before the company completed an expansion in March. The shutdown began the week of July 10 and was scheduled to last 21 days, according to outside sources.

Assuming the train restarts on schedule and without mishap, Motivas ability to manage the shutdown reflects progress that the market has made recovering from its supply disruptions. The turnaround was originally scheduled to begin in April, but the company postponed it due to concerns it did not have inventories needed to supply customers while production was halted. Stocks were at rock bottom throughout the industry at that time after a string of plant disruptions.

As it prepared to shut down the train last month, Motiva indicated it had built up enough inventory to get through the turn-around. The company added that it has contingency plans in case unexpected problems arise; the unit being worked on produces a light-viscosity oil, but one of the other trains can also make that grade if needed.

The restart of the idled Port Arthur train should further speed the markets recovery. It also means that the industry should now begin to feel the impact of the plants massive expansion. Motiva officials have said the impact was muffled initially by its need to stock up for the turnaround. Once its inventories reach comfortable levels, more oil will be available, and the North American market will see what it means to have 15 percent more Group II/III capacity than it had before the expansion.

Buyers are hopeful, with some saying that this slug of new volume – by the end of the year – cannot help but tip the supply-demand balance in their favor, exerting downward pressure on prices.

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