12 October 2010 12:15 [Source: ICIS news]
DUBAI (ICIS)--More Group I base oil plants face permanent closures as most are located at the least viable refineries in the Atlantic basin, according to consultants speaking at an industry conference on Tuesday.
Amy Claxton, CEO of My Energy, told delegates at the 7th annual ICIS Middle Eastern Base Oils & Lubricants conference in Dubai, United Arab Emirates, that the oldest and least efficient plants would shut down.
Group I base oils would still represent 52% of global consumption by volume in 2015, but premium transportation oils would increasingly be produced from Group II and Group III base oils in a more specialised market, she said.
Stephen Ames, managing director of SBA Consulting, said the past 18 months had been a turbulent period in the global base oils market and for many companies, it had been difficult.
Although demand for base oils was growing again, ?xml:namespace>
But decisions about which plants would close depended more on the economics of fuel production than on than on the dynamics of the base oils market,
Demand for fuels derived from crude oil had already peaked in North America and
At the same time, demand for petroleum-based fuels was increasingly diesel-oriented,
New fuel refineries in the Middle East and Asia would add to downward pressure on refining margins in the Atlantic basin,
Around 2m bbl/day of fuel refining capacity needed to close and stay closed in Europe and
Claxton expected that total global base oil production capacity would remain constant until 2015. Increased production from new Group II and Group III plants would be offset by Group I shutdowns, she said.
Shell’s and Qatar Petroleum’s joint-venture gas-to-liquids project in Qatar was the largest of five new base oil production facilities in the Middle East and Asia, which would together bring an additional 60,000 bbl/day of base oils capacity in the period 2012-2014, she said.
The higher viscosity index of base oils from the
There would still be a market for Group I base oils in standard applications, she insisted, and Group I plants would remain an important source of brightstock and paraffin wax, which are not co-produced with Group III base oils.
She noted that prices for brightstock and wax were higher than for Group III base oils.
The ICIS Middle Eastern Base Oils & Lubricants conference continues until 13 October.
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