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Insight looks at some of the key
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global base stocks market
02 go deeper into any of the topics that interest you. What’s more, this format
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Winter fuel quality
05
Look out for the interactive buttons like this throughout the
Exploring the southern
hemisphere data from the publication to help you get straight to the information you need.
Winter Diesel Fuel Survey
Two features in this issue take real advantage of the added functionality
that digital publications provide. As part of our Infineum Trends 2012
Premium technology
06
presentation, which is being delivered in the US, Europe and Asia Pacific,
Delivering performance way we were able to interview a number of our industry contacts from across
ahead of ILSAC GF-5
the globe on a wide range topics. We have used some of this material to
give a view of two key topics: aspects of the global base stocks market and
Fit for export the fast changing Russian lubricants market. We have been able to bring
09
these two features to life by including some of the original video footage
Middle East refineries turn
from the interviews.
to fuel additives to meet
export fuel specifications
One area of focus for the crankcase lubricants industry right now is the fast
changing specification landscape and in particular the implications that the
Insight interview
upgrade to the North American passenger car and heavy-duty engine oil
Maxim Donde on the
Russian lubricant market 12 performance standards will have on our industry. We plan to keep you
informed about the progress being made as we move through the category
developments in regular updates. For the latest view flip to page 17
Investing in technology Other features in this issue cover the results of our southern hemisphere
The Editor
Diary dates
Insight is the quarterly industry magazine for the fuels and lubricants additives
industry, published by Infineum International Ltd. The views expressed in Insight
may not necessarily represent those of Infineum.
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As part of our Trends 2012 presentation, we asked a number of our industry contacts
to give their views on future industry trends and drivers. In this feature, Insight looks
at some of the key questions that are shaping the global base stocks market.
The base stock market is still recovering Maxim Donde, General Director of LLK Group I is expected to account for less
from the effects of the global economic International (Lukoil), gives us an insight than 50% of total base stock production
slowdown and is now entering a period into the picture in Russia. “The Russian by 2020 - although imports of Group I
of real uncertainty and rapid change. base oil market has always been a Group I products into Latin America, Asia and the
To get a good picture of this rather market, and I think that Group I will be Middle East may help sustain Group I
volatile market we spoke to a number of out there for some time. In the industrial production in North America and Europe.
industry players from around the world. market for example, the share of The challenge for the remaining Group I
While we talked about all aspects of the imported high specification lubricants is producers is how to compete in a market
market – Shell’s GTL plant, the uncertainties around 6% and the rest is still fairly low with increased availability of high quality
surrounding PAO, trends in Group I, II grade Group I based lubricants. It’s base stocks.
unlikely in the short term that the vast
and III supply – in this feature we focus on “Right now we’re still around 60%
quantity of industrial equipment here will
two key topics: the so called ‘decline of Group I in the world, and 30% Group II
be converted to something that needs
Group I’ and the ‘rise of green lubricants’. and about 10% Group III and Group III+,
higher quality industrial lubricants. That is
but I see that landscape shifting over the
Group I decline probably different for the passenger car
next decade,” says Claxton. “Although I
The increased demand for higher quality segment where Group III and IV will
still see a good future for Group I, they
finished products is driving the industry to replace the lower specification lubricants
won’t have the dominant role that they
use higher quality base oils, which means at a much faster rate.”
have today – it’s equilibrating more along
further closures of Group I plants seem Key success factors for many Group I the lines of one-third Group I, one-third
inevitable. This puts Group I in suppliers will be their ability to rebalance Group II, and one-third Group III,” she states..
increasingly short supply, and leaves a base oil cuts to favour high margin
void in the market as Group I currently speciality products and to find new
supplies some critical products including segments in which to deploy them.
bright stocks for marine and crankcase “Group I base oil will vanish from the
mono grade lubricants, transformer oils crankcase lubricant market sooner rather
and wax. than later,” says Henrik Holmqvist, Senior
Adviser, Neste Oil. “It’s already vanished
“In the US, people thought Group I would
from European PCMOs. So Group I in the
become obsolete as Group II grew and
future might be a speciality oil.” Claxton
flourished and hydroprocessing
agrees, “Europe has always been an
technology took off. But in fact that has
export hub for Group I to other parts of
not happened,” explains Amy Claxton,
the world, and to the extent that those
owner of My Energy. “As always, supply
Group I plants make heavy neutrals and
and demand are great equalizers. Prices bright stock, there’s still a very strong
for bright stock for example are in parity market for those products. This has given
with the highest Group III and Group III+, rise to a market space for some smaller
Insight June 2012
which means Group I plants that make companies that are more specialty-
heavy neutrals and bright stock continue minded to take up that niche and
to have a very reasonable return on continue to make these more unique
investment,” she continues. products from our Group I plants.”
©Infineum
©Infineum International
International Limited
Limited 2012.
2012. All
All rights
rights reserved.
reserved. 03
Holmqvist adds, “I don’t think base oils
Hear the views of Amy Claxton, Henrik Holmqvist and
produced from biomass are going to play
a big role in the coming 5 or 10 years. Joe Rousmaniere captured for Infineum Trends 2012.
You have to understand that it’s a very
complicated process and it will be very
expensive. I think they have to enter the
top tier market because they are so
expensive compared to present products. Amy Claxton, My Energy
There would need to be some form of
legislation push to see more of this type of
base oils.” Knapp has a slightly different
take on biolubes and their potential
impact on his business. “Lubricants made
from vegetable oils are a concern to us.
If they become a large part of the market
place, they will find their way into the
used oil collection system. And we know
that a big slug of that is going to cause us
a lot of problems at our re-refineries.”
However, in our view, without significant
investment in infrastructure and a strong
regulatory push it is likely to be some
time before these green-oils move into
a more mainstream position in the
lubricants industry.
Other developments
It is important to recognise that the
Henrik Holmqvist, Neste Oil
impact of GTL has not been seen in the
market place yet. Shell’s second GTL train
is starting up in June 2012 and significant
sources of natural gas have been found
in North America setting the stage for
additional growth. “The door is opening
for natural gas in an economic proportion
that would support a large GTL plant
in the US,” confirms Claxton. “I would
imagine that the major oil companies
would be looking at that as part of their
portfolio and if gas prices stay low relative
to crude oil prices, some companies may
consider producing Fischer-Tropsch base
oils as Shell has done in Qatar.”
As a precursor to the full The data for the southern hemisphere is to continue for the foreseeable future.
challenging to analyse because the dataset We expect this increased use of FAME
Infineum 2012 Worldwide to be replicated in the results of the full
is quite restricted and the samples collected
Winter Diesel Fuel Quality are not always consistent from year to year, Winter Diesel Fuel Quality Survey.
Survey, which will be as several of the countries sampled may
Sulphur trends
have different grades circulating at the
published in October, fuels same time.
Another noticeable trend is the continued
overall lowering of sulphur levels, again
chemist Robin Hunt reveals mostly in the South American samples.
The Latin America region, which is the
some of the key findings of largest of the sample populations, does All southern hemisphere samples tested,
the data collected in the not have any regulatory body to help with the exception of Argentina, were
organise, steward and provide consistency below 400 ppm sulphur, with most below
southern hemisphere. 300 ppm. Argentinean samples had sulphur
to fuel specifications across the countries.
This means that fuel quality differences levels of 800 ppm, although we expect
The characteristics and quality of diesel
originate at the very beginning – at the upcoming legislation to lower these
fuels is continuing to evolve as regulations
specification level. figures to be more in line with other Latin
push for increased fatty acid methyl ester
American countries, a trend that we will
(FAME) use and further desulphurisation. This subset of the Winter Diesel Fuel
be looking for in the 2014 Survey.
Understanding the fuel quality and trends Quality Survey data highlights trends in
in various regions, especially as the fuel two of the usual big topic areas covered by Looking ahead
market expands through exports, is the full Survey – namely FAME use and fuel As we anticipated in the 2010 Survey,
increasingly important in order to meet sulphur levels. FAME use is still the main factor of interest
local requirements. in this subset of the 2012 Winter Diesel
Biodiesel trends Fuel Quality Survey. As more renewable
The Infineum Winter Diesel Fuel Quality The mandated volume of FAME that must
fuel regulatory mandates are introduced
Survey aims to provide a good overview be blended into diesel fuels is continuing
and FAME blend ratios rise towards (and
of the quality of automotive diesel in the to increase and as we would expect there
even beyond) 10% we expect to see a
global marketplace. Insight regularly is evidence of FAME in many of the survey
wider range of effects than the standard
publishes highlights from the full dataset. samples. However, no FAME was detected
lowering of HFRR. In the future it will be
But, with the analysis of the winter samples in the Australian or South African samples,
important to guard against oxidation,
from the southern hemisphere now while in South America, with the exception
stability and filterability issues along with
complete, we were keen to quickly share of Chile, 100% use of FAME was observed.
increased wax content that may not be
the findings from this subset to enable This is reflected in the continued lowering
apparent in current fuel samples.
readers to make well informed decisions. of High Frequency Reciprocating Rig (HFRR)
wear scar values in the region.
Sample collection Register your interest in
receiving the full Winter Diesel
In this dataset 39 samples were purchased This increased FAME use appears to be
Fuel Quality Survey in October
from service stations in seven countries. driven by local mandates. Argentina
This sampling method helps to ensure currently has a 7% voluntary blending
the fuels are representative of the fuel ratio, which is expected to increase via
purchased by the average consumer. a mandate to 10% in 2012. Add to this
Insight June 2012
Sampling points were selected so that the push for Brazil to increase blend
the fuels represented the production from requirements to 20% by 2020 and it
each refinery or region in a given country. is clear that this is a trend that is likely
North America’s profitable premium rest of the North American passenger such as Mobil 1 extended performance,
synthetic motor oil market is dominated car motor oil market which is flat Pennzoil Ultra, Castrol Edge with Titanium
by several well known brands, which to declining. and Amsoil Signature Series.
include Mobil 1, Pennzoil Platinum, However, the impact of SAE 0W-20 and Today’s consumers are discerning and
Castrol Edge, Valvoline SynPower and dexosTM may limit the growth of the very demanding. They want to cut the cost
Amsoil. In this market segment the premium segment, and a lower tier full of motoring, reduce used oil and keep
combination of brand strength, premium synthetic is likely to emerge. So, although their cars reliably on the road for longer
approvals and high performance claims ‘synthetics’ remains a growth segment, between services. But, at the same time,
provide value to the end customer and marketers will need to find new ways to they are also looking for improved fuel
allow the oil marketer to command differentiate and maintain the profitability economy, better engine protection and
a premium price. The market for full of this value added segment. These trouble free motoring. However, the
synthetic oils is growing; unlike the include even higher performing products, consumer is not the only stakeholder with
high expectations. OEMs are demanding than the one next to it on the shelf.
improved lubricant performance to However, to achieve this differentiated Infineum P5711
protect advanced engine hardware and performance formulators must choose
to enable them to meet environmental the right combination of high quality Infineum premium additive
legislation and offer longer warranties on base stock and carefully designed additive technology offers significant
their vehicles. To ensure oil quality meets package and, at the same time, balance performance advantages over
their exacting requirements many OEMs, cost and availability issues. conventional ILSAC GF-5 or dexos1TM
including GM, Toyota and Honda, are technologies. When used to create
introducing their own lubricant The combination of SAE 0W-20 viscosity full synthetic oils Infineum P5711
specifications or recommendations. grades with specifications such as delivers a number of benefits:
dexos1TM, which require a 13% NOACK • Extends oil drain intervals
Gone are the days when a lubricant volatility, make it extremely challenging • Improves fuel economy
branded as a ‘synthetic blend’ brought to formulate high quality, low viscosity (in SAE 0W-20)
value to the oil marketer by commanding differentiated products using conventional • Delivers good fuel economy
a price premium. Today this claim says retention
Group II or Group II+ base stocks.
nothing specific about oil quality or • Provides excellent oxidation
However, Group III supply is currently
performance and now applies to just stability performance
tight – although we expect this situation
about any motor oil that uses API • Improves engine cleanliness
will ease as Neste Oil’s new supply reaches
Group III base stocks in its formulation and deposit protection
North America and as Shell’s GTL plant
– no matter how little. This has left •G
ives outstanding sludge
comes fully online.
many marketers without a true mid-tier protection
product in their portfolio and many of The other part of the equation is using • Exceeds ILSAC GF-5 and
the larger marketers are shying away the right additive package. In our view, dexosTM requirements
from describing their products as ‘part the use of next generation detergent • Offers excellent low
synthetic’ or ‘synthetic blend’ because inhibitors in premium full synthetic temperature protection
there is just no value left in those terms. products allows lubricant marketers to • Meets all GM4718M
deliver value and capture a higher price specification requirements
The North American lubricant market is
becoming increasingly segmented, with for their products. In combination with Infineum SV
ultra low viscosity oils for fuel economy, polymers it has a very broad
The use of premium Group III base stocks, viscosity grade coverage from
GM’s dexosTM oils, high-mileage oils, advanced viscosity modifiers and next SAE 0W-20 right up to SAE 5W-50,
re-refined oils and biolubricants, plus generation additive packages offer oil which provides better film
a growing number of private labels all marketers the ability to capture higher thickness for severe applications.
finding a space.
value through truly differentiated features
So with this increasingly complex and and premium performance. These high
Contact us to learn more about
overcrowded marketplace how do performance oils not only meet the
our top tier offerings and to discuss
marketers get any attention for their increasingly tough demands made by
future opportunities of working
Insight June 2012
product? In our view, focusing on a both OEMs and consumers, but also allow
premium ILSAC GF-5 oil gives marketers the marketer to more easily differentiate with us to differentiate your
a real opportunity to differentiate their their oil from the competition and help to products in the marketplace.
oil and tell consumers why theirs is better deliver improved returns.
As the Middle East ramps up its low sulphur diesel fuel production for the export market
John Maddox, Fuel Additive Deployment Technologist, Middle East & Africa, examines
the role that fuel additives play in ensuring the fuels meet regional specifications.
The refining industry in the Middle East However, ASTM D975 does not provide low temperature properties to ensure
is changing rapidly. New refineries are all the information that a refinery needs that the diesel supplied is suitable for
being built and others are undergoing to produce diesel for export to the US. the intended use. A number of tools
upgrades to allow the production of ultra Lubricity targets are clear, being set at can be used to help reach this agreement
low sulphur diesel. All of this activity adds 520 µm High Frequency Reciprocating including the Low Temperature Flow Test
capacity and increases the potential for Rig (HFRR) average wear scar diameter (LTFT) and Cold Filter Plugging Point
the region to export finished diesel to at 60°C, but cold flow requirements are (CFPP) test, which are used to estimate
other markets in the US, Asia and Europe. more complex and less well specified. vehicle low temperature operability.
However, these opportunities are creating The tenth percentile minimum air
The ASTM believes it is unrealistic to
challenges, as refineries work to meet temperatures can be used to help
specify low temperature properties that
the varied specifications of their global to estimate expected regional target
will ensure satisfactory vehicle operation
customers. Additives are now playing an temperatures for use with cloud
at all ambient conditions. Instead they
increasingly significant role in helping point, LTFT and CFPP test methods.
suggest that the fuel supplier and
the refiner to meet the specifications
purchaser should agree appropriate However, any diesel which enters the
requirement of the export destinations.
US pipeline system is subject to an
To enter the export market the refiner overriding agreement, which requires
must first gain a good understanding the cloud point to be below -9°C and
of the specifications required by the pour point to be below -18°C.
potential markets and make a decision
about which can best be targeted.
Understanding specifications
Specifications in most US states are
controlled by ASTM D975 and, although
seven different grades are specified, only
two grades containing 15 ppm sulphur
are of interest as export fuels. The first
is grade No. 1-D, which is a special
purpose light distillate for automotive
diesel engines. The second is grade
No. 2-D, a general purpose middle
distillate, which can also be used in
non-automotive applications.
Insight June 2012
be elevated economics.
In Europe the financial incentives to use cold flow additives are high Selecting the right cold flow additive
is typically done through a complex
Russia is one of the world’s exciting growth economies. Valera Verstelle, Head of
Infineum UK Ltd’s Representative Office in Moscow, recently took the opportunity
to talk to Maxim Donde, General Director of LLK International (Lukoil), about his
perspective of the country’s fast changing lubricant markets.
As you would expect in a growing to grow,” he explains. “But we also have a thing of the past. GOST specifications
economy, vehicle production and sales in a desire to expand further. One area is have been out there for decades; right
Russia are healthy and industry analysts our marine lubricants project, which now I don’t think anyone would be
expect the country to overtake Germany started in 2008 and now has almost 2% investing their time to upgrade them.
as the largest car market in Europe by of the market worldwide, which we will I think the OEM claims will replace
2016. This forecast, and the fact that continue to expand.” them and the GOST specifications will
Russia has joined the World Trade be something of the past. I expect the
Today, the Russian lubricant market is
Organization, means western vehicle share of imported lubricants to grow,”
oriented towards sales of low quality
manufacturers have been rushing to he continues “something we will fight
Russian GOST and low quality API
invest in local production facilities in
technology lubricants. We asked Donde because this specific market segment is
order to capture a share of the market.
for his views on the future of lubricant very exciting to us because it is where
Russia is currently the fourth largest quality. “I don’t think you can talk about we make the most money. We intend
global lubricant market, with future the Russian lubricants market as one to compete with lubricants of the
growth expected to be significant as the homogeneous market. If you take same high quality – they will just be
vehicle population builds. However, the passenger car motor oil, we already domestically manufactured.”
recent economic turbulence has created see a huge percentage of high quality
For commercial transport the situation is
some uncertainty about the potential for lubricants and that’s a reflection of the
growth. We wondered if this uncertainty foreign auto manufacturers getting into different. Here he estimates the share of
might lead local lubricant companies to the country in a very aggressive fashion. imported high quality lubricants to be
expand their sales outside of Russia and Right now the estimates vary quite a bit, around 12%, with limited evidence that
therefore compete with the existing but everyone agrees that the share of the imported and high quality lubricants
major oil companies. imported lubricants is above 50%, so are growing. “Any growth will be
we no longer talk about these so called because sales of imported vehicles may
“When you say ‘local Russian lubricant
GOST lubricants as a major driving grow,” he explains. “We see quite
companies’ you probably mean Russian
force in the market. With the emergence aggressive behaviour from Russian
integrated oil companies, for example
of OEM claims they are likely to become domestic auto manufacturers in this
Rosneft, Gazprom Neft and Lukoil,” says
Donde. “I don’t think you can call these
companies ‘local’ because they are
pretty big, which makes them regional
majors with certain ambition for growth
outside Russia.” “Fuel economy is important to every economy in the world.
It is clear that Lukoil shares these
However it hasn’t been as important in Russia as in the
ambitions. “In the commonwealth of European markets because we have an abundance of
energy resources and the price of the energy has been
Insight June 2012
Today’s top tier lubricants must deliver Medium speed, four-stroke trunk piston dispersion of asphaltenes is therefore
engine durability and sustained fuel engines used to power coastal and cruise becoming increasingly important for
economy without compromising ships typically run on heavy fuel oil (HFO). future marine TPEO formulations.
Voith Class A
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