Asian base oils heading for turbulence - Petronas

18 June 2008 04:16  [Source: ICIS news]

KUALA LUMPUR, Malaysia (ICIS news)--Asian base oil markets have entered a period of high volatility given tighter supplies of Group 1 base oils and high feedstock cost, a senior Petronas official said in his opening remarks at the 2nd Asian Base Oils and Lubricants Conference on Wednesday.

“There is a typhoon coming,” Joe Rousmaniere, CEO of Petronas Baseoils, said referring to the high volatility of feedstock due to the rapid rise in crude prices and declining margins for base oil manufacturers.

Asia, which is a net importer of Group 1 base oils, has seen a decline in imports from traditional suppliers like Iran, Russia, Europe and the US in recent times, he added.

“Feedstocks have risen significantly, tripled from the first quarter in 2004 to the fourth quarter in 2007, due to the big rise in oil prices,” said John Paisie, a partner with energy consultancy PFC Energy in the presentation.

He added that there was a dis-connect between oil prices and demand supply fundamentals, and that other factors were driving up crude prices.

Expectations of strong demand from China and India were also cited as growth drivers for base oils.

The two-day conference in Kuala Lumpur closes on Thursday.

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By: Steve Tan
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