Luberef’s Group II base oil plant in Yanbu will start up in second quarter of 2016

The Luberef base oil expansion project in Yanbu, Saudi Arabia is nearly complete, according to Gerard Heaton, Luberef sales and marketing manager, based in Jeddah, Saudi Arabia.

Speaking at the ICIS Middle East Base Oil Conference in Dubai, United Arab Emirates, last week, Heaton said the expansion “will take us slightly over 1.2 million tonnes” per annum capacity.

He explained that the expansion has two elements: a new kit and the revamping and expansion of the older facility.

“We are keeping the Group I facility in Yanbu to produce more bright stock,” he said. “There is a new Group II plant in Yanbu and we will keep the Jeddah plant to produce Group I.”

He said keeping the old Group I facility would help solve the current global bright stock supply-demand gap of about 10%, “which is a nice manageable number.”

While the gap is gradually declining, as various Group I plants have closed down or announced that they will be shutting down, Luberef is taking advantage of this supply-demand gap by expanding bright stock production at its Group I plant in Yanbu.

Heaton said eventually bright stock demand will decline, “because people are moving to multigrade [oils].” But currently, some industrial lubricant formulations require bright stocks, which Group II base oils currently cannot meet. Luberef’s older Group I plant in Jeddah will also continue to operate, he said.

Meanwhile, its new Group II plant in Yanbu will be starting up in the second quarter of 2016, with commercial availability of products in the third quarter of 2016.

“When you bring into a market a new product that is not being used in the region, you can decide to lead the market and facilitate change. Luberef’s decision was to lead and facilitate that transition.”

Heaton said that Luberef will be coming out with Group II base oils with pre-approved lubricant formulations from all four major additive companies (Lubrizol, Infineum, Chevron Oronite and Afton Chemical). Since the Middle East region is 75% automotive, the focus of these lubricant formulations will be on automotive applications as well, he said.

“These winds of changes will continue and our job is to find out how we take the industry forward,” Heaton said.

Luberef is 70% owned by Saudi Aramco and 30% by Saudi Arabia’s Jadwa Industrial Investment Group, which bought ExxonMobil’s 30% stake in Luberef in December 2007.