InterviewHPCL predicts 4% growth in Indian lubricants market

12 October 2010 16:20  [Source: ICIS news]

By Anu Agarwal

DUBAI (ICIS)--The Indian finished lubricants market is expected to grow at around 4% annually, in both the automotive and industrial lube sectors, a senior industry executive said on Tuesday.

R Sudhakar Rao, Executive Director at India's Hindustan Petroleum Corporation Limited (HPCL), said India's total lubricants market was currently around 1.8m tonnes, the third largest in the world after the US and China.

Half of this was automotive oils, 25% industrial oils, 10% process oils, 10% greases and 5% marine lubricants.

India produces around 800,000 tonnes of base oils while the deficit of close to 1 million tonnes, is met through imports - largely from Korea and Iran, he said on the sidelines of the 7th ICIS Middle Eastern Base Oils & Lubricants conference.

Growing automotive production in India was the key factor spurring the demand for lubricants - India is the world's largest producer of three-wheelers, second largest producer of two-wheelers and the worlds fourth-largest passenger car and tractor market, said Rao.

''India is also adding significant power generation capability in the coming years - plans to start some 60,000 megawatts of power generation plants over the next five years, is also contributing to the growth in demand for transformer oils'', he added.

Rao said that there was an ongoing shift in the quality of base oils being used in the country and this was being driven by a number of factors.

The government's regulatory push in terms of the Clean Air Act, as well new engine design and technology and consumer demand for warranties and extended drain intervals, were all driving the increasing use of higher quality base oils.

HPCL was currently in the midst of converting its 335,000 tonne/year group I base oils plant to produce some higher quality base oils- namely group II and group III base oils.

After the conversion is completed in December, the total base oils production capacity of the company will be 360,000 tonnes/year - of which 160,000 tonne/year will be group I, 180,000 tonne/year will be group II and around 20,000 tonne/year will be group III.

The company would continue to produce some 30,000 tonne/year of brightstock.

When asked whether India was likely to build any new base oils facility, he said that if a new greenfield refinery was constructed in 2020 on the western coast of India - which was being planned currently - then a base oils facility could be a part of the plan.

''The big challenge with base oils is the type of crude that is required to be processed at the refinery, whereas refinery economics in general are not based on base oils,'' he added.

Base oils usually require a paraffinic and waxy crude, as that provides optimum base oil yields. However, refinery economics work on fuels production and this could work on various different types of crudes.

Rao estimated Indian base oils demand to hit 3m tonnes by 2015 on the back of automotive, infrastructure and power generation sectors.

The main producers of base oils in India include HPCL, Indian Oil Corp (IOC) and Bharat Petroleum (BPCL).

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By: Anu Agarwal
+65 6780 4359



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