Base oil margins set to return to comfortable range

18 June 2008 11:07  [Source: ICIS news]

KUALA LUMPUR (ICIS news)--Refining margins for base oils are likely to return to a more comfortable range as the market stabilises, said an industry player on Wednesday.

 

The current situation was a “combination of market dynamics in the short term and new processing putting pressure on old refineries,” XB Cox, senior planning adviser at ExxonMobil, said at the 2nd ICIS Asian Base Oils and Lubricants Conference.

 

“As the market levels out and stabilises lubes refining margins will get to a more comfortable range. Some inefficient group I and II plants may still be challenged,” Cox added.

 

In a rapidly changing crude oil and feedstock environment, base oil refining margins have come under considerable pressure in recent months.

 

Volatility in the upstream markets and the time lag for base oils to catch up with the rapid upward movements had pressured base oil margins but this situation was not likely to last, he added.

 

Fundamentally, refining costs had improved along with the increased scale of plants, he said.

 

While years ago a typical base oil plant would have a capacity of 3,000-5,000 bbl/day, the typical size was now 8,000-10,000 bbl/day, which had resulted in lower operating costs, Cox said.

 

The two-day conference ends on Thursday.

 

To discuss issues facing the chemicals industry visit ICIS connect

 

 

 

 

By: Shelley Kerr
+44 20 8652 3214

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