FOCUS: Base oils projects in Asia may be delayed

14 February 2007 16:51  [Source: ICIS news]

LONDON (ICIS news)--With construction costs rising and contract crews being in short supply because of too many ongoing petrochemical projects, some of the new base oils refineries expected to start up in Asia in 2008 are facing delays of up to two to three years, according to an industry expert from Asia.

 

“Many of us in the market were expecting a base oils tsunami in Asia in 2008. But the delays in the ongoing projects mean that won’t happen,” Mr Joe Rousmaniere, head of Malaysia’s Petronas Base Oil (M) Company said in London on Wednesday.

 

More than 61,000 bbl/day of new capacities in Group II and Group III base oils were slated to come up in 2008 in Asia. “All new base oils projects which have been announced in the past decade are in Asia,” he said.

 

If the projected capacities were to come on stream as slated, that would have put tremendous downward pressure on the market and would have led to the closure of many Group I plants around the world, Mr Rousmaniere said. However, “it appears this may not happen in 2008”, he added.

 

With major global automobile manufacturers like Mercedes Benz, Ford and Toyota prescribing Group II and Group III base oils in their lubricant specifications, the global base oils market has seen a shift in emphasis from Group I to Group II and Group III base oils.

 

Among the new projects is Petronas’ 6,500bbl/day Group III project, which was on schedule for starting up in May 2008, the Malaysian company’s base oils chief said.

 

The Melaka Group III project, which is being undertaken in collaboration with process technology licensor Exxon Mobil Research Company, will produce two top-tier base oils under the brand names of Etro-4 and Etro-6 when completed.

 

Mr Rousmaniere, formerly general manager of global base oils player Lithcon, said manufacturers were still enjoying good profit margins even at the presently depressed market levels.

 

“The base oils supply constraints in the US that happened in the wake of the hurricanes in 2005 had skewed the market, which led to many base oils suppliers enjoying sky-high margins. The market has since come down from those high levels, but still producers are making decent profits,” he said.

 

Mr Rousmaniere is in London to attend the two-day 11th World Base Oils Conference starting 15 February. More than 300 delegates from the base oils market all over the world have registered to attend the conference, organised by ICIS.

By: Shibu Itty Kuttickal
+65 6780 4359

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