Page 12 - Fuels & Lubes International 2014 - Q2

FUELS & LUBES INTERNATIONAL Volume 20 Issue 2 12
B a s e O i l C o l u m n
Over the next few
years, the lubricating base oil
industry can expect to see a sharp
decline in bright stock supply. Five
to six million tons of base oil will
simply disappear from the market
as Group I production facilities
are closed or upgraded across
the globe. Production has shifted
toward high-quality Group II and
III base oils to such a degree that,
by 2022, there will be a substantial
shortfall in bright stock supplies
produced by Group I plants with
few alternatives within the same
price bracket. Already, neutral-to-
heavy oils are becoming difficult
to source while Group II and III
plants have begun to oversupply
lighter-viscosity grade oils. Today,
nearly half of the base oils being
produced globally are Group I
while Group II makes up 30% and
Group III about 11%. The rest is
mostly comprised of naphthenic
base oils. As Group I production
drops sharply, it is expected that
bright stocks will grow in value.
Because bright stocks represent
a very small fraction of Group
I production, refineries cannot
justify keeping Group I plants
open as the overall demand for
Group I base oils declines. The
problem is that bright stocks
are absolutely essential for the
lubrication of systems under
extreme pressure. That is one
quality that no other base oil can
match. Group II and III plants
cannot produce bright stocks
because they produce base oils
by cracking or hydroprocessing
instead of refining. Therefore,
cost-effective alternatives
are going to have to make up
the difference.
Asia as the Epicenter
Kline said that the rapidly ap-
proaching global deficit is evident
through a careful examination
of the global base oil market,
which is comprised of mineral,
synthetic and recycled products.
Currently, Asia remains the
epicenter of volumetric lubricant
demand, representing 43% of the
38.6 million tons in use globally.
North America is a distant second,
capturing 25% of the market,
followed by Europe with 17%.
The other major regions of Africa,
2022 2 The following report brings
together data and analysis first
developed for “The Outlook for
Group I and Bright Stock Market:
An analysis of long-term supply
and demand scenario and its
implications,” presented by Geeta
Agashe, Kline and Company’s senior
vice president for energy, on Nov.
15, 2013 at the Lubricants & Waxes
Meeting of the American Fuel
& Petrochemical Manufacturers
(AFPM) in Houston, Texas.
Photo courtesy of Nynas
The future of
lubricating base
oils through