ExxonMobil announced last Wednesday it has published its inaugural, first-of-its-kind report on the global base oil industry, titled, ExxonMobil Basestocks 2018 Industry Pulse Report, in partnership with KRC Research, a global research consultancy. Based on viewpoints from hundreds of decision makers in the industry, the report uncovers insights into the ever-evolving market. The report is designed to help pinpoint industry drivers, evaluate the base oil landscape and explore current trends.
“We found the insights from the ExxonMobil Basestocks 2018 Industry Pulse Report particularly informative and because of this, we decided to share this broadly, in an aim to help educate the industry for the changes the future may bring,” said Ted Walko, Global Basestocks and Specialties Marketing Manager at ExxonMobil.
The ExxonMobil Basestocks 2018 Industry Pulse Report revealed that nearly 75 percent of base oil decision makers view Group II base oils as the “heart” of the market. The survey found that currently only 18% of companies are using Group I, 34% are using Group II and 32% are using Group III (additionally, 9% are using Group II+ and 6% are using Group III+), but in 10 years, projected usage will be 10% Group I, 33% Group II and 36% Group III base oils.
In addition, the report showed that Group II base oils are seen as the most important to the automotive (34 percent), marine (31 percent), industrial (37 percent) and commercial vehicle (41 percent) industries. While base oil decision makers in Europe, the Middle East and Africa (EMEA) are least likely to say that Group II base oils are the heart of the market (60 percent), more than half (52 percent) said they would likely transition away from Group I and/or Group III base oils if they had access to a Group II manufacturer.
“We pride ourselves on having a strong lens into the industry and these results substantiate why we are committed to investing in expanded Group II supply through our three, strategically located refineries in Baytown, Texas; Jurong, Singapore; and Rotterdam, Netherlands,” Walko added.
One-third of base oil decision makers said that while demand for Group I base oils has decreased at the highest rate, when compared to other base oil groups, they still see its importance. Seventy-two percent admit the decline in Group I demand has had a significant impact on the industry. Decision makers ranked Group I’s top three benefits with viscosity (54 percent) in the top spot, closely followed by its solvency (49 percent) and affordability (46 percent).
“We recognize that Group II is not a perfect fit for all applications and this report affirmed our confidence in Group I and the value it will continue to play in the base oil industry,” Walko explained.
According to the report, a majority believe the current API standards are sufficient for formulating and manufacturing engine oil. Sixty-one percent of decision makers concurred, and slightly more than one-quarter (27 percent) disagreed, calling for an adjustment now. Some believe (12 percent) that the standards should be adjusted within the next 10 years.
The survey found that while more than three-fourths (77 percent) are concerned about the increased implementation of fuel economy and emissions regulations, they feel confident that the base oil industry will keep up. Eighty percent asserted their confidence in the base oil industry’s ability to keep up with evolving regulations. Two-thirds believe that Group II or Group III base oils can best handle an increase in more stringent fuel economy and emissions regulations.
ExxonMobil currently has a combined production capacity of 72,600 barrels per day of Group I base oils at six plants (Baton Rouge, Louisiana, 16,000 b/d and Baytown,Texas, 9,800 b/d, in the USA; Port-Jérôme-Gravenchon, France, 12,000 b/d; Augusta, Italy, 14,000 b/d; Fawley, UK, 7,800 b/d and Pulau Ayer Chawan, Singapore, 13,000 b/d). The company has 2 plants that produce Group II base oils (Baytown,Texas, 18,200 b/d, and Jurong Island, Singapore, 31,000 b/d) with a combined production capacity of 49,200 b/d and has two plants that produce Group III base oils (Fawley, UK and Port-Jérôme-Gravenchon, France) with a combined capacity of 2,000 b/d, 1,000 b/d each.
In addition, ExxonMobil is building a 20,000 b/d (estimated) Group II base oil plant in Rotterdam, The Netherlands, scheduled to start up later this year and is adding 6,000 b/d Group II capacity to its existing 31,000 b/d capacity Jurong Island plant in Singapore by 2019. This will bring ExxonMobil's global base oil production capacity to 72,600 b/d of Group I base oils, 75,200 b/d of Group II base oils and 2,000 b/d of Group III base oils.
For more information, the full report can be downloaded here: https://www.exxonmobil.com/en/basestocks/news-insights-and-resources/industry-insights/2018-industry-pulse-report.