State-owned energy company China National Offshore Oil Corp. has begun producing API Group III base oils at its refinery in Taizhou, Jiangsu province, despite impediments thrown up by the COVID-19 pandemic.
In November, the refinery’s base oil plant churned out 1,000 tons of Group III oils, marking the Taizhou plant’s first entry into China’s Group III base oil market, according to a statement from the company. It started with two viscosity grades.
In the statement, CNOOC boasts that one of its advantages is that it is a vertically integrated oil major with the produces its own crude oil. Many Chinese refiners buy imported crude oil to refine high-quality base oils. But in 2020, when the pandemic hit the global economy, crude oil experienced drastic price fluctuations and supply chain issues, causing a shortage in China.
CNOOC mostly uses crude oil drilled from its field in the South China Sea to ensure itself stability in price and supply.
“With our high-quality paraffinic crude oils and advanced hydrocracking and -processing technologies, CNOOC has the capability to ensure our clients a less disrupted, long-term supply of high-quality Group II and Group III base oils for the China market,” the statement said. The Taizhou facility uses Chevron’s hydrocracking technologies.
Before it began making Group III, the Taizhou plant had capacity to make 410,000 t/y of Group II and 200,000 t/y of naphthenic base stocks.
China relies mainly on foreign refiners for Group III base oils. In the case of Sinopec – one of the few other Chinese companies producing Group III – its Group III base oils are mostly for internal use, with little for the rest of the market.
Unlike Sinopec, CNOOC will sell part of its Group III oils to the market, said a CNOOC sales manager from the Taizhou facility, who gave only his surname, Lei.
“We will also use part of the base oils for our own lube products,” Lei told Lube Report Asia. “As for how much percentage depends on the market demand for our lubes.” CNOOC markets automotive and industrial finished lubricants under its Hai Jiang brand.
He added that the Taizhou plant has capacity to make 20,000 t/y of Group III and aims to make 15,000 tons in 2022.
Lei shrugged off the concern of the pandemic, which recently induced sporadic but frequent local lockdowns across China. He said the Taizhou facility was running at full capacity even in the throes of the pandemic in 2020.
“The virus is well controlled in China, and we don’t think it will cause serious damages to the economy, like it did in 2020,” he said.