SEOUL, KOREA - Hyundai OilBank has completed the construction of a lubricant base oil plant with a capacity of 650,000 tons a year. As all four oil refiners plunged into the lubricant base oil market as a way to cope with the falling profitability, they will inevitably face harsh competition ahead.

 

 

 

Hyundai OilBank said on September 25 that it held an opening ceremony of Hyundai-Shell Base Oil Co. at its Daesan plant in the city of Seosan, South Chungcheong Province, with Shell Asia-Pacific president Mark Gainsborough and Hyundai-Shell Base Oil president Moon Jong-bak in attendance. Lubricant base oil is oil derived from refining crude oil, used in a wide variety of applications such as lubricant for automobiles, ships, and industrial purposes.

 

Located within the Daesan plant of Hyundai OilBank, the lubricant base oil facility had been completed in July after 18 months of construction and went through a two-month pilot run. The 60:40 joint venture between Hyundai and Shell will process 20,000 tons of heavy oil and produce 650,000 tons of lubricant base oil annually. The company expects to make an annual sales revenue of 1 trillion won from the operation.

 

With the entrance of Hyundai OilBank in the lubricant base oil business, competition within the market will get fiercer. In response to the rising lubricant demand in emerging market economies in China, India, and Latin America, Korean oil refiners have strengthened their lubricant base oil business of late. The industrywide production capacity of the four producers is 7.65 million tons, including SK Innovation (3.5 million tons), GS-Caltex (1.3 million tons), S-Oil (2.2 million tons), as well as Hyundai OilBank (650,000 tons).