ConocoPhillips to Market S-Oil's Group III

Status
Not open for further replies.
Joined
Jun 11, 2002
Messages
3,351
Location
Clarksville, Tennessee
ConocoPhillips to Market S-Oil's Group III
By Tim Sullivan

ConocoPhillips Co. and S-Oil Corp. announced Monday that they have entered an exclusive agreement for ConocoPhillips to distribute the Korean refiner's Group III base oils in the United States.

Through the arrangement, S-Oil hopes to muscle in on a business that has been dominated by another South Korean refiner, SK Corp.

Lithcon Petroleum USA, a Houston company that markets SK's Group III base oils in the United States, says it sold 30 million gallons of Group III in 2002, accounting for approximately 80 percent of open market sales.

ConocoPhillips said the S-Oil arrangement will allow it to broaden its product offering. ConocoPhillips currently produces Group II base stocks, marketed under the Pure Performance brand name, as a 50-percent owner of the Excel Paralubes joint venture in Westlake, La. (Shell agreed last week to sell the other 50-percent share to Flint Hills Resources, a wholly-owned subsidiary of Koch Industries Inc.)

ConocoPhillips and S-Oil officials also indicated they expect Group III demand to continue growing, thanks to increasingly challenging performance standards for motor oils, as well as for other automotive and industrial lubes.

"The combined offering of S-Oil's VHVI products and our Pure Performance base oils comes at a time when the need for higher quality base stocks is poised to grow significantly due to the technical demands of new specifications for engine oils and other lubricants," said Tom Liberti, general manager of lubricants for ConocoPhillips. "We are able to offer the lubricant formulator the convenience of a single supply source for all of their premium base stock requirements."

The partners said S-Oil's base oils will be available on the Gulf Coast by the third quarter of this year and on the West Coast soon after. It also raised the possibility of adding other distribution locations at later dates.

The companies are working now to obtain lubricant additive company approvals to use S-Oil's base oils in API-SL passenger car motor oils and plan to have approvals by mid-year. They vowed to have approvals for the next passenger car motor oil upgrade, GF-4, by early next year.

S-Oil first began making Group III last year at its Onsan base oil refinery, after an expansion that raised capacity to 22,500 barrels per day, of which 6,000 b/d is Group III.

Lithcon has been selling SK's Group III in the United States since 1997 and has said that orders in the U.S. have maxed out its supply capabilities. ChevronTexaco, Motiva and Petro-Canada also produce Group III in North America, primarily for internal consumption. ExxonMobil imports Group III that it produces elsewhere. Finnish oil company Fortum also imports Group III stocks.
 
It's interesting that any North American oil company would find it economically viable to import Group III basestocks all the way from S. Korea. Is S. Korea an oil producing nation?
 
quote:

Originally posted by Jay:
It's interesting that any North American oil company would find it economically viable to import Group III basestocks all the way from S. Korea. Is S. Korea an oil producing nation?

Oil base stock is a by-product from the refining of crude oil for fuel, not from pumping oil from a well. Korea needs the fuel for their industry as well as transportation, but doesn't need the corresponding amount of lubricating oil due to their limited road network--industry takes lubes, but not all.


Ken
 
Status
Not open for further replies.
Back
Top