Corrected: Middle East to be global base oil supply hub by 2020

27 June 2012 07:42  [Source: ICIS news]

Correction: In the ICIS story headlined "Middle East to be global base oil supply hub by 2020 – consultant" dated 27 June 2012, please read in the first paragraph...on Wednesday... instead of ... on Tuesday ....  A corrected story follows.

SINGAPORE (ICIS)--The Middle East is expected to emerge as a new global supply hub for base oils by 2020 as new capacities are added to the region's portfolio, according to an industry consultant on Wednesday.

The move comes as suppliers in the Middle East gear up for a boost in demand for Group III base oils, with a 16% increase in capacity expected to come online by 2017 compared with 2011, said Blake Eskew, vice president of consulting firm Purvin & Gertz.

Eskew was speaking at the 6th ICIS Base Oil & Lubricants conference held in Singapore on 27-28 June.

"A lot of the new capacity that is coming online, mainly in Asia and the Middle East, are driven by opportunistic factors," Eskew said.

"These include favourable feedstock that can be found within the supplying region or processing investments to capture additional value," Eskew added.

According to Eskew, around 48% of the new capacities globally are opportunistically driven. Of this, 60% is targeted at the production of Group III base oils.

"Asia, and especially the Middle East, will dominate growth in base oil capacity, with the latter region in a good position to be the new global supply hub," Eskew said.

Just under 3m tonnes of new capacity will come from the Middle East alone, according to Eskew.

"Demand for base oils in the region will be low, but its capacity growth is enormous," Eskew said, adding that mature markets such as Europe will become net importers by 2020 when new supply comes from the Middle East.

This is because Group III material is in demand for use in passenger vehicles in Europe, the US and Japan, where engine specifications call for a premium-quality base oil with high viscosity index.

By: Andrea Heng
+65 6780 4359

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