SINGAPORE (ICIS): ExxonMobil is on track to start commercial production at its latest lubricant base stock upgrade project in Singapore by 2025 after facing construction delays due to the pandemic , according to a company official.
The company’s Singapore waste upgrade project “is progressing well and is still on track for 2025,” Pascal de Bast Thiers, ExxonMobil’s business readiness manager for the project, told ICIS.
The project adds around 20,000 bbl/d of capacity for light, heavy and extra heavy lubricants base stocks to its integrated refining and petrochemical complex in the Southeast Asian country.
The project will bring additional supplies from ExxonMobil EHC 50 i EHC 120 grades to market and up to 6,000 bbl/d of extra-heavy base stocks, including a new Group II base stock EHC 340 MAX.
The project was initially slated for commissioning in 2023, but was delayed due to the COVID-19 pandemic causing staffing disruptions, he said.
De Bast Thiers said the pandemic also “really hit demand” in the core stocks and downstream lubricants sectors, with the war between Russia and Ukraine adding to short-term volatility.
“When we look at demand now we know there is short-term variability, but when we look at the long-term, we see strong resistance to demand for lubricants,” he said.
In the passenger vehicle lubricants market, demand is expected to peak and eventually over the next decade, with the transition to electric vehicles particularly affecting demand, de Bast Thiers said.
Commercial and industrial demand for lubricants will drive the market in the long term, supported by the continued rise in the middle-class population, especially in Asia Pacific, he said.
“Demand for goods and demand for personnel and freight will continue to grow, so we see resilience in demand for commercial vehicle lubricants,” he said.
“If you move to the industrial and marine segments, we see demand continuing to grow in those segments,” de Bast Thiers said.
Industrial demand for lubricants is expected to grow at an average annual rate of about 1% between 2010 and 2035, he said, adding that demand from the commercial and marine vehicle segments is projected to be around 0 .8%
“We see a continued shift to higher quality lubricants and therefore higher quality base stocks where we see Group II continuing to be the workhorse of the industry,” de Bast Thiers said.
Within Asia, India’s rapid population growth and a projected four-fold increase in its GDP by 2050 will be a key driver for lubricants demand, he noted.
“We also see quality requirements increasing … in India with fuel economy,” the ExxonMobil official said, citing the recently implemented Bharat-6 emissions standards.
Fuel economy refers to how efficiently a vehicle uses fuel to travel a given distance. Vehicles with better fuel economy use less fuel, resulting in lower fuel costs and reduced emissions.
India’s Bharat Stage (BS) emission norms regulate tailpipe emissions of air pollutants.
On the supply side, the production of basic stocks has improved with the gradual return of demand for fuel from the fall at the height of the pandemic, he said.
The conflict between Russia and Ukraine has also affected the supply of oil feedstock to refineries in some geographic areas, as Russian crude accounts for about 10% of global crude production globally, he said.
“Now with the return and demand for fuel that we’re seeing, the availability of feedstocks to make base oils is returning to historic levels,” de Bast Thiers said.
Interview article by Nurluqman Suratman
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