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).
