Hyundai and Shell Base Oil Company Ltd begins production at base oil manufactur
HYUNDAI and SHELL Base Oil Co., Ltd. a joint venture company formed by Shell and Hyundai Oilbank, today inaugurated a new base oil manufacturing plant in Daesan, South Korea. The plant has the capacity to produce approximately 13, 000 barrels per day or 650 kilotonnes of API Group II base oils per year.
Mark Gainsborough, Executive Vice President for Shell Lubricants, said: “As the demand for higher
quality lubricants is on the rise in Asia, the region is shifting away from Group I base oils towards
increased use of Group II and Group III base oils. This plant contributes significant Group II base oil
supply to Shell’s supply chain in the region, helping us grow our premium lubricants business in
Asia, especially in China and Northeast Asia.”
The plant was built to capture the growing demand for Group II base oils in Asia. Construction was
completed in a record 20 months, close to 2 months ahead of schedule and successful commercial
production of base oils began in July 2014.
This is the fourth base oil production plant for Shell in the region, after Pulau Bukom in Singapore,
Kaohsiung in Taiwan and Yokkaichi in Japan (a joint venture). Shell base oil production plants in
Asia work alongside Shell’s network of 19 blending plants in the region, to deliver high quality Shell
finished lubricants. Shell has blending plants in China, Singapore, Thailand, Malaysia, the
Philippines, Vietnam, South Korea, Pakistan and India. Shell is also currently building two new
blending plants in Asia, one in China and one in Indonesia.
Base oils are the key component of finished lubricants, making up on average of 60-80% of the
end product. There are five technical grades of base oil based on the composition of saturates,
sulphur and viscosity group I, II, III, IV and V.
The joint venture (60% Hyundai Oil bank, 40% Shell) currently only manufactures base oils. It is
located at the existing HDO refinery in Daesan, South Korea. Like crude oil, base-oils are also
traded on the open market. Commercial agreements are 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
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 base oil manufacturing plant for Shell globally. Three of
Shell’s current base oil manufacturing plants are in Asia: Pulau Bukom in Singapore; Kaohsiung
in Taiwan and Yokkaichi in Japan (a joint venture).
Shell has a global network of 50 lubricant blending plants, where base oils are blended with
additives to make finished lubricants.
Shell produces finished lubricants for transport (passenger cars, heavy duty vehicles, ships and
planes) as well as industry (including power, mining and manufacturing).
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 Pennzoil, Quaker State, Shell Helix, Shell Rotella, Shell Tellus and Shell
Rimula. We are active across the full lubricant supply chain. We manufacture base oils in eight plants, blend
base oils with additives to make lubricants in over 50 plants, distribute, market and sell lubricants in over 100
We also provide technical and business support to customers. We offer lubricant-related services in addition to
our product range. These include: Shell LubeMatch –the market leading product on-line recommendation tool,
Shell LubeAdvisor – helps customers to select the right lubricant through highly trained Shell technical staff as
well as online tools, and Shell LubeAnalyst – an early warning system that enables customers to monitor the condition of their equipment and lubricant, helping to save money on maintenance and avoid potential lost
business through equipment failure.
Shell’s world-class technology works to deliver value to our customers. Innovation, product application and
technical collaboration are at the heart of Shell lubricants. We have lubricants research centres in China,
Germany, Japan (in a joint venture with Showa Shell), and the USA. We invest significantly in technology and
work closely with our customers to develop innovative lubricants. We have a patent portfolio with 150 + patent
series for lubricants, base oils and greases; more than 200 scientists and lubricants engineers dedicated to
lubricants research and development.
Customer benefits include lower maintenance costs, longer equipment life and reduced energy consumption.
One of the ways we push the boundaries of lubricant technology is by working closely with top motor racing
teams such as Scuderia Ferrari. These technical partnerships enable us to expand our knowledge of lubrication
science and transfer cutting-edge technology from the racetrack to our commercial products.