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Chevron Base Oils

2013 Chevron U.S.A. Inc.

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February 2013

Chevron Continues to Invest in the Group II Base Oil


Market
Chevron has and is continuing to increase its base oil
production capacity

Richmond, USA Expanded Q2 07

Yeosu, S Korea On line Q4 07 (JV with GSH*)

Pascagoula, USA Q4 2013

Preparing market for further premium base oil growth

De bottleneck generating further capacity

20

Global Market Share, %

Global Base Oil Capacity


Premium Base Oil - 2013

15

10

Strong commitment for uninterrupted supply globally


leading up to start up of Pascagoula base oil plant
Source: Lubes N Greases 2010 Wall Map
Equity ownership is included for joint ventures

Chevron market proposition

Multiple supply sources

Global product slate

Strong portfolio of product qualifications

Proven logistics and security of supply

Growing demand for premium base oils

Group II has significant potential for meeting increased demand for Low/Mid SAPS applications

Group II can be used in vast majority of lubricant applications


* Operated by GSC

2013 Chevron U.S.A. Inc.

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February 2013

Trends in base stock usage are changing

Industry and OEM specifications require the use of higher performing


base oils
Manufacturing complexity for lubricant blenders will increase.
However, use of Group II base oils can play a significant role in
optimising formulations and reducing manufacturing complexity
Group II base oils:
Optimise levels of Group III in formulations
Proven use in modern automotive and industrial applications

Blending plant, product development and procurement strategies


need to align

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February 2013

European 2011 PCMO and HDMO market


by viscosity grade
700,0

Slowly trending to lighter viscosity


grades for factory fill and service
fill applications

600,0

kMT

500,0
400,0

PCMO
HDMO

300,0

5W-X & below


10W-X & below

200,0

Performance criteria and viscosity


grade determine base oil selection

100,0
0,0

Industry and OEM specifications


mandate different performance
criteria within viscosity grades

PCMO
2013 Chevron U.S.A. Inc.

Manufacturing and supply


complexity will increase

HDMO
Source:
Kline
Confidential

February 2013

Low SAPS HDMO And PCMO Specifications Require


The Use Of Low Sulphur Base Oils
Phosphorus
0.12%

PCMO
HDMO
API CJ-4
ACEA E9
ACEA E6

ACEA

C1-08

Phosphorus
0.09%

C2-08
C3-08
C4-08

Sulphated
Ash
Sulphur
0.8%
0.4%

Sulphated
Ash
1.0%

Volatility
13%

Sulphur
0.3%

Volatility
13%

Allowable sulphur limit is consumed by additives


Must use mostly Group II or Group III
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February 2013

Changing OEM performance and viscosity grade


requirements will increase manufacturing complexity

HDMO

Full
SAPS

Visc Grade

Gp I

20W-50

15W-40

10W-40

10W-30

Gp III

5W-30

5W-40

10W-40

PCMO

Gp I/III

Typical EAME Supply


Group I
Group III
Group IV (PAO)

5W-40

5W-30

0W-30/20

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Gp III/IV

Confidential

February 2013

Changing OEM performance and viscosity grade


requirements will increase manufacturing complexity

HDMO

Full
SAPS

Visc Grade

Gp I

20W-50

15W-40

10W-40

10W-30

Gp III

5W-30

5W-40

10W-40

PCMO

Gp I/III

Gp III/IV

Typical EAME Supply


Group I
Group III
Group IV (PAO)

5W-40

5W-30

0W-30/20

Inadequate properties
to meet Low/Mid SAPS
15W-40 specifications

15W-40

HDMO

Low/
Mid
SAPS
PCMO

10W-40

10W-30

5W-30

5W-40

10W-40

5W-40

5W-30

0W-30/20
2013 Chevron U.S.A. Inc.

X
Confidential

February 2013

Changing OEM performance and viscosity grade


requirements will increase manufacturing complexity

HDMO

Full
SAPS
PCMO

Visc Grade

Gp III
Gp

20W-50

XX

15W-40

XX

Gp I/III
Gp
II/III

10W-40

XX

10W-30

XX

Gp III

5W-30

5W-40

10W-40

5W-40

5W-30

0W-30/20

HDMO

Low/
Mid
SAPS
PCMO

With Group II/II+/III


can formulate a full
product line, except
0W-XX
Increased flexibility
for optimising
Low/Mid SAPS
X

Potential lower cost

15W-40

10W-40

10W-30

5W-30

5W-40

10W-40

5W-40

5W-30

0W-30/20
2013 Chevron U.S.A. Inc.

Gp III/IV

Different formulations
in each viscosity
grade will increase
future complexity
X

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February 2013

Group II Base Oils:


Optimal formulating alternative for Low/Full SAPS HDMO
Reference

Alternative

Low SAPS
10W-30 / 10W-40 / 15W-40

10W-30

10W-30

10W-40

15W-40

III
II+

III

II

II

II+

II

II

Comparable performance
Full SAPS
15W-40

15W-40
SN 500

II
I

220R

SN 150

Higher performance
2013 Chevron U.S.A. Inc.

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February 2013

Group II Base Oils:


Optimal formulating alternative for Low/Full SAPS PCMO
Reference

Alternative

Low SAPS
5W-30/40

5W-30

5W-40

III

III

Comparable

III
II+

II+

performance

Full SAPS
10W-40

10W-40

Higher

III
III

performance

II

2013 Chevron U.S.A. Inc.

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February 2013

10

Global Base Oil Capacity


Base Oil Capacity by Quality

Base Oil Capacity By Region


January 2012

kt/y

Group III
8,7%

20.000

Naphthenic

9.8%

GTL
1,4%

15.000
Group II
24,4%

Group I
55,7%

10.000

5.000

ASIA

NORTH
AMERICA

Group I

Europe

Group II

FSU

Group III

MIDDLE
LATIN
EAST & AMERICA
AFRICA
GTL

Naphthenic
Source: PFC Energy

2013 Chevron U.S.A. Inc.

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February 2013

11

Premium Base Oil Capacity is Growing at a Fast Pace

kMT

1800
1600
1400
1200

Group II
Group III
Group II/III

Chevron
Pascagoula

1000
800
600
400
200
0

2005

2007

2009

2011

2013

2015

2017

Data from LubesNGreases


2013 Chevron U.S.A. Inc.

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February 2013

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While Premium Base Oil Capacity is Growing,


Group I Capacity Is Declining
70

% Global Production Capacity


Rate of Increase of Group II
and Group III demand
expected to increase

60
50

2010

2015

Group I plants rationalizing


Significant variations in
regional demand

40
30
20
10

Source: LubesnGreases

0
Group I

2013 Chevron U.S.A. Inc.

Group II Group III Group IV


(PAO)
Confidential

February 2013

13

Automotive Product
Summaries

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February 2013

14

Industry Leading Product Qualification Portfolio In


Chevron Group II/II+ Base Oils
HDMO
ACEA
API

E7

E4

CI-4/SM

E9

E6

A3/B4

C3

C2

CJ-4/SN

CI-4
Low SAPS

SN

SN

SN

Std SAPS Std SAPS Mid-SAPS


5W-30
5W-40
10W-30
10W-40
15W-30
15W-40
15W-50

PCMO

Std SAPS Mid-SAPS Mid-SAPS

Recognition of Group II benefits by additive companies, continued investment

Extensive portfolio of North American HDMO/PCMO qualifications based on API also


available

Extensions of selected automotive qualifications ongoing

Expanding portfolio of industrial qualifications

2013 Chevron U.S.A. Inc.

Confidential

February 2013

15

Base Stock Properties For Blending Premium Engine


Oils Group II/II+/III Covers All Viscosity Grades
Base Oil Noack Volatility, % Wt Loss

30,0
27,0

100N

24,0
21,0

150N

18,0
15,0

5W-30

12,0

10W-30
10W-40

220N
15W-40

Group I

9,0
6,0
3,0

Group III

PAO

20W-xx

Group II+

0,0

0
2013 Chevron U.S.A. Inc.

1000

2000

3000

4000

Base Oil
CCS (cP at -20C)
Confidential

5000

6000
February 2013

14,000
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Industrial Product
Summaries

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February 2013

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Meeting ISO Viscosity Grades For Industrial


Applications With Hydroprocessed Base Oils
Viscosity Classifications

Base Oil Formulating Range

ISO
ISO
VG
VG

Group I
+ Bright
Stock

Group II
+ Bright Stock

68

Group I

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>70% of industrial
Group III applications are
ISO 68 or less
February 2013

18

Hydroprocessed Base Oils can Significantly Improve


Oxidation Characteristics of Turbine Oils
ISO VG 32 Turbine Oil

20000
ASTM D943

TOST (hrs to 2 TAN)

24000

16000

300% longer life


with Group II

12000
8000
4000
0

2013 Chevron U.S.A. Inc.

Group I
With Additive
Confidential

Group II
With Additive
February 2013

19

In Turbine Oils, RPVOT Test Shows


Group II And Group III Enable Strong Performance
Choice of additives strongly affects oxidation stability
2500
Group I

2000

Minutes

Group II
1500

Group III

1000
500
0

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C
Alternative Additive Packages
Confidential

D
Chevron data
ASTM D2272

February 2013

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20

Multifunctional Ashless R&O Technology Performance


Comparison of Group I, Group II and Group III Base Oils
RPVOT (ASTM D 2272)

Demulsibility @ 54C (ASTM D1401)

Gp I

Gp II

Gp III

Air release 50C (ASTM D 3427)


5
4
3
2
1
0
Gp I

2013 Chevron U.S.A. Inc.

Gp II

Lifetime, Minutes

10

1500
1000
500
0

Gp I

Gp II

Gp III

TOST, 95C, Oxygen, Fe and Cu


Catalysts (ASTM D 943)
Hours to TAN 2 mg KOH/g

20

Thermo-Oxidative Stability

Minutes

2000

Minutes

Surface Characteristics

30

Gp III
Confidential
Source, King Industries

10000

>10K hours
5000

Gp I

Gp II
February 2013

Gp III
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Industrial Qualifications Summary

Lz

Hydraulic Oils
Ash Containing
Oronite
Afton

Turbine Oils

R&O oils

RheinChemie

Ashless
RheinChemie

RheinChemie

King Industries

ISO VG 32

ISO VG 46

ISO VG 68

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February 2013

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Optimised Group II NGEO Formulations Can Extend


Drain Periods
Comparative Drains in CAT 3516 TALE Engines
3000

2500

Hours

2000

1500

1000

500

0
Industry benchmark (Gp I) Industry benchmark (Gp II)

Additive A in Gp II

Additive B* in Gp II

* Additive B = Oronite OLOA 44506 + Chevron 600R

2013 Chevron U.S.A. Inc.

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February 2013

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Optimised Group II NGEO Formulations substantially


reduce combustion chamber deposits

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February 2013

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Increasing Global Availability of Chevron Base Oils

Hamburg Hub
220R

600R

?
Antwerp
Hub

Richmond

100R

Pascagoula

220R

600R

150R

110 100R 220R 600R


RLV

USWC Hub

Yeosu (JV)*

110
RLV

110 100R 220R 600R


RLV

USGC Hub

Gp II/II+
Products

HUBS
USWC

60R

USGC

Antwerp

100R

?X

110RLV

Hamburg

Singapore Hub
220R 600R
100R 150RYeosu
Singapore

X
X

150R
220R

?
X

600R

600R

100R 220R 600R

Future
consideration
X hubs
X under X
X
X

*Yeosu is a JV between Chevron and GSH operated by GSC


2013 Chevron U.S.A. Inc.

Confidential

February 2013

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In Summary.

Chevron Group II base oils can help mange complexity


Portfolio of market general qualifications for industrial and automotive
applications continues to expand
Chevron Pascagoula base oil project is progressing on time and on
budget
Global distribution network for Chevron base oils continues to expand

2013 Chevron U.S.A. Inc.

Confidential

February 2013

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Appendix

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February 2013

Chevron Base Oils Typical Properties

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February 2013

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