Shell combines with Hyundai Oil Bank to help meet increasing lubricants demand in the East

Pearl Gas to Liquid plant, Qatar, Base oil Manufacturing plant (BOMP), tanks at Night

Base oils are the key component of finished lubricant product, making up on average 60-80% of the end product. This plant will therefore significantly increase lubricant supply across the region, including China.

Commissioning, start-up and operation of the plant will be managed by a joint venture between the two companies; Hyundai and Shell Base Oil Co., Ltd (HSB). Once fully operational, expected in the second half of 2014, the plant will produce 650kt of API Group II base oils a year. A formal ground breaking ceremony to mark the start of this cooperation will take place at the refinery on Tuesday 22 January.

Located at HDO’s refinery in Daesan, this location is close to key lubricants markets and has strong infrastructure. This will be Shell’s fourth BOMP in the region, which works alongside 19 lubricant blending plants. Shell recently announced its intention to build two more blending plants in China and Indonesia.

This plant is being built in response to an expected growth in high quality lubricant demand in the East, driven by new vehicle ownership and production, construction and industrial activity – especially in the power generation and oil and gas production sectors. 

“We are pleased to enter into this joint venture with HDO” said Mark Gainsborough EVP, Shell Global Commercial.  “It is a partnership that recognises Shell’s strengths in base oil technologies, and our leadership position in lubricants blending and marketing.  In Hyundai Oil Bank we have found a worthy partner. Its world class refinery facilities combined with its project management expertises are a great fit with Shell’s lubricants business.”

For the moment the joint venture (60% HDO, 40% Shell) will concentrate on manufacturing base oils. Like crude oil, base-oils are also traded on the open market. Commercial agreements have been put in place with Shell taking some of the base oil and using it to create high quality finished lubricants at its blending plants around the region. 

Enquiries

Shell International Media Relations: +44 (0) 20 7934 5550
Shell Asia: Serene Loo, +65 63848943; serene.loo@shell.com

A selection of supporting images (photos and video) is available on request.

Notes to editors

• Once manufactured, the base oils are blended with additives to produce finished lubricant: the amount and type of mix depends on the end-use.  This takes place at stand alone lubricant Blending plants.
  
  
• Base oils are a commodity traded on the open market, such as crude oil. Factors influencing the price of base oils include: crude oil production, manufacturing capacity utilisation, known and unknown maintenance, lubricant demand across various regions as well as the macroeconomic conditions prevailing in the various major markets.
  
  
• Demand for base oil is projected to grow significantly in the world over the next decades and especially in the Asia Pacific region. The Asia Pacific region is driving global growth in lubricants demand. By 2020 it is estimated the region will represent more than 50% of all demand.
  
  
• Overall finished lubricants demand is also projected to grow by 10% 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.
  
  
• When completed this will be the ninth BOMP for Shell globally. Three of Shell’s current base oil manufacturing plants are in Asia: Pulau Bukom in Singapore; Kaosiung in Taiwan and Yokkaichi in Japan. This is Hyundai Oilbank first involvement in a BOMP.
  
  
• Shell has a global network of 50 lubricant blending plants where base oil are blended with additive to make finished lubricants, 19 of which are in Asia including China, Singapore, Thailand, Malaysia, the Philippines, Vietnam, South Korea, Pakistan and India. Shell has also recently announced its intention to build two new lubricant blending plants, one in China and another one in Indonesia.  Our lubricant plant in Torzhok, Russia also came on-stream in October 2012. 

About Shell Lubricants

The term ‘Shell Lubricants’ collectively refers to Shell Group companies engaged in the lubricants business. Shell sells a wide variety of lubricants to meet customer needs across a range of applications. These include consumer motoring, heavy-duty transport, mining, power generation and general engineering. Shell’s portfolio of lubricant brands includes Shell Helix, Shell Rimula, and Shell Spirax. We are active across the full lubricant supply chain. We manufacture base oils in eight plants, we blend base oils with additives to make finished lubricants in almost 70 plants, and we distribute market and sell lubricants in over 100 countries.

We have more experts talking to more customers than any other lubricants supplier. We have over 350 technical support specialists and 1,000 sales professionals working with customers every day. We offer a wide range of services in addition to our products, including Shell LubeMatch, a market leading online tool that matches lubricants to vehicles and equipments, and Shell LubeAnalyst, an early warning system that enables our business customers to monitor the condition of their equipment and lubricant, helping to save money on maintenance.

Shell’s world-class technology is applied in our products and technological collaborations. We have four leading lubricants research centres in Germany, the UK, the USA, and Japan (in a joint venture with Showa Shell) with more than 200 scientists and engineers dedicated to lubricants research and development. We have 150 + patent series for lubricants, base oils and greases. One of the ways we push the boundaries of lubricant technology is by working closely with top motor racing teams such as Scuderia Ferrari and Penske Racing. These technical partnerships enable us to expand our knowledge of lubrication science and transfer cutting-edge technology from the racetrack to our commercial products.

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