If you are used to buying a particular product and a supplier comes along offering a higher-quality alternative with improved performance and at lower cost then you are bound to choose it, right? That is the key issue in the base oils market, argues Brian Crichton, director of Crichton Consulting.

The SK Lubricants-Repsol plant in Cartagena, Spain, came onstream in October last year, producing Group II and III base oils

Most lubricant manufacturers can effectively have a free performance upgrade by switching their base oils supply from Group I to Group II, he points out.

With significant new Group II capacity added to the market over the past year, and more scheduled over the next 2-3 years, the challenge for Group I producers will likely become more stark. Last year saw huge base oil facilities come on stream in the US, Europe and Asia.

 At Pascagoula, Mississippi, in the US, which exclusively makes Group II base oils, came on line in July, while the SK Lubricants/Repsol joint venture plant in Cartagena, Spain, started up at the end of September with a total capacity of 630,000 tonnes/year producing both Group II and III product.

Also in September, Hyundai and Shell Base Oil Co brought on stream a new base oil manufacturing plant in Daesan, South Korea. The plant has a Group II base oils capacity of 650,000 tonnes/year (see box story on following page).

Significant new capacities are also due on stream in 2015. Among them is the Abu Dhabi Oil Refining Co (TAKREER) plant in Abu Dhabi which will produce 100,000 tonnes/year of Group II and 500,000 tonnes/year of Group III base oils; CNOOC’s 600,000 tonne/year Group II facility in Taizhou, China, as well as expansions of existing Group II ExxonMobil facilities in Singapore and the US.

Furthermore, Luberef – Saudi Aramco’s base oils business – is expected to complete the expansion of its Yanbu facility in 2015, bringing on stream up to 500,000 tonnes/year of new Group II/III capacity.

Source : icis