« Insights & News

Base oil plant launched to meet demand for premium lubricants in Asia

13,000-barrel-per-day manufacturing plant has been built to meet the rise in demand in Asia for higher-quality lubricants requiring Group II and Group III base oils for blending.

Image credit:

Updated on 25 Sep 2014 12:12 GMT

Hyundai and Shell Base Oil Co., Ltd. - a joint venture company formed by Shell and Hyundai Oilbank - today (September 25) inaugurated a new base oil manufacturing plant in Daesan, South Korea. The plant has the capacity to produce approximately 13,000 barrels per day, or 650 kilotonnes, of API Group II base oils per year.

Commenting on the launch, Mark Gainsborough, Executive Vice President for Shell Lubricants, said: "As the demand for higher quality lubricants is on the rise in Asia, the region is shifting away from Group I base oils towards increased use of Group II and Group III base oils. This plant contributes significant Group II base oil supply to Shell’s supply chain in the region, helping us grow our premium lubricants business in Asia, especially in China and Northeast Asia."

The plant was built to capture the growing demand for Group II base oils in Asia. Construction was completed in just 20 months - close to 2 months ahead of schedule - and commercial production of base oils began in July 2014.

This is the fourth base oil production plant for Shell in the region, after Pulau Bukom in Singapore, Kaohsiung in Taiwan and Yokkaichi in Japan (a joint venture).

Shell base oil production plants in Asia work alongside its network of 19 blending plants in the region, to deliver finished lubricants.

Shell has blending plants in China, Singapore, Thailand, Malaysia, the Philippines, Vietnam, South Korea, Pakistan and India. It is also currently building two new blending plants in Asia, one in China and one in Indonesia.

Base oils are the key component of finished lubricants, making up on average of 60-80 percent of the end product. There are five technical grades of base oil based on the composition of saturates, sulphur and viscosity group I, II, III, IV and V.

Demand for base oil is projected to grow significantly in the world over the next decades and especially in the Asia Pacific region, which is driving global growth in lubricants demand. By 2020, it is estimated the region will represent more than 50 percent of all demand.

Overall finished lubricants demand is also projected to grow by 10 percent per annum in China and other Asian countries. The growth is predominantly in higher-quality lubricants requiring Group II and Group III base oils for blending.

Shell has a global network of 50 lubricant blending plants, where base oils are blended with additives to make finished lubricants. The company produces finished lubricants for transport (passenger cars, heavy duty vehicles, ships and planes) as well as industry (including power, mining and manufacturing).

Island Petroleum extends coverage in Ashdod

Now also offering in-port and anchorage deliveries at Israeli port.

Gasum performs first truck-to-ship LNG delivery in Germany

'Several projects' lined up in Belgium, Germany, Netherlands and Poland.

GP Global undertakes financial restructuring

Seeks asset investment to overcome 'tight cash position'.

Bunker Holding posts best-ever annual result

Declares itself 'world's leading bunkering company' with pre-tax profit of $155.2m.

Glander International Bunkering posts 73% profit rise

Pre-tax earnings up to $27.3m as CEO warns of industry consolidation following Covid-19.

Glander International Bunkering adds Canden Marine Fuel Services to global network

Quebec firm to operate as Glander International Bunkering (Montreal) Ltd from June 1.

Hydrogen and ammonia the best long-term fuel options, say owners

Nearly 60% of shipowners surveyed see hydrogen and ammonia as the most attractive future fuels.

Brightoil signs Petrolimex debt settlement, seals $30m loan

Settlement reached over $30m owed to Petrolimex as China Huarong ups financing.

Maersk Ocean posts 25% profit growth despite higher bunker costs

Cost-cutting initiatives pay off amid Covid-19 impact.

Bunker One channels 'entrepreneurial spirit' with expansions

Supply portfolio strengthened in US Gulf, Caribbean and West Africa.