Shell to continue Singapore Group I base oil production; mulls Group II plant

Nurluqman Suratman

05-Jul-2022

SINGAPORE (ICIS)–Anglo-Dutch energy major Shell has overturned a previous decision to cease operations at its Group I base oil plant in Singapore amid supply concerns, a company spokesperson told ICIS on Tuesday.

“Shell will extend operation of its Group I base oil manufacturing plant within the Pulau Bukom Manufacturing Site in Singapore, a strategic hub for Shell’s lubricant operations,” the spokesperson said.

The plant has a 380,422 tonne/year or 7,400 bbl/day capacity, according to ICIS data.

“This decision is driven by Shell’s intent to safeguard the supply security for its customers in a market environment with increased supply disruption risks,” the Shell spokesperson said.

In May last year, Shell had announced that it will cease operations at the Singapore Group I base oil plant from July 2022 amid a global decline in demand for the product.

Meanwhile, the energy giant is mulling building a Group II base oil plant in Singapore.

“The Group II base oil plant is pending final investment decision (FID) and we will share more details in due course,” the spokesperson said.

In February, Shell listed the planned Singapore Group II base oil plant in its list of pre-FID projects.

Group I and Group II base oils are interchangeable for some downstream applications.

Global Group II capacity is projected to overtake Group I capacity by 2025 to become the dominant base oils group, according to ICIS Supply & Demand Database.

Group II capacity growth has accelerated since 2019 following a slew of start-ups and expansions in China, while Group I capacity is expected to decline slightly due to upcoming closures such as Japan ENEOS’s Negishi unit in October 2022.

Additional reporting by Matthew Chong

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