Europe base oil closures could up Middle East prices – CEO

14 October 2009 13:13  [Source: ICIS news]

Europe base oil closures could up Mideast pricesDUBAI (ICIS news)--The closure of Group I base oil plants in Europe could lead to higher prices for the material in the Middle East and a potential shift towards increased use of Group II/III grades in the region, sources said on Wednesday.

If plant closures mooted in Europe were realised, prices for Group I base oils in the region would increase due to reduced supply, said Samir Nawar, CEO of Saudi Arabia's Petromin Group, during a panel discussion at the 6th ICIS Middle East base oils and lubricants conference.

Several European refineries with associated base oil plants have been put up for sale in recent months, leading to speculation in the market that potential buyers may not be interested in operating the base oils units.

These included Eni's facility at Livorno, Italy and Shell's refineries at Stanlow in the UK and Hamburg, Germany

Other panel members, however, were keen to point out that a refinery changing hands did not necessarily signify that base oils production would be halted.

Daniel Ianuzzi of trading company Feedco SA, cited the example of the Petit Couronne refinery in France, which was sold by Shell to Petroplus. Petroplus continues to run the base oils unit at the site, and has an offtake agreement with Shell.

Nawar added that reduced supply could lead to a shift towards the use of higher quality Group II and III base oils despite a lack of technical demand for large volumes of  higher specification base oils in the region.

Consumption of base oils in the Middle East is concentrated predominantly on the Group I grade.

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By: Shelley Kerr
+44 20 8652 3214

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