Strategically, this is a hard pill to swallow as the Middle East continues to be a source of Group I base oils. And with its close proximity to emerging African markets, tough choices lie ahead.

One industry expert claims there are opportunities for blenders that use higher quality base stocks despite regional constraints such as climate conditions and a tendency toward short drain intervals among consumers. Nick Burton, lubes deployment technologist at Infineum International Ltd., Abingdon, U.K., said that because base stocks are the main constituent of automotive lubricants, it is clear they will be an integral part of the solution to the lubricants challenge now and in the future.

Speaking in October at the ICIS Middle Eastern Base Oils and Lubricants Conference in Dubai, he noted that although there is a shift away from Group I base stocks, they have served a variety of markets very well for a number of years. Nevertheless, improvements in current base stock production are changing market dynamics.

We are seeing improved low temperature properties in the form of cold crank simulator viscosity, higher viscosity index with reduced variation in viscosity as temperature changes and lower volatility overall, Burton commented. He said the Middle East market is pivoting away from API SL/CF performance levels (SAE 20W-50 viscosity grades) toward API SN with enhanced performance while maintaining SAE 20W-50 viscosity. We are classifying the market in API terms because North American and Japanese fleets form a good deal of the vehicle market in the region, he said. The market is dominated by thicker viscosity grades, but the move toward API SN has shown performance improvements in the areas of piston deposits, engine sludge and elastomer compatibility.

Burton noted that the Middle East heavy-duty diesel finished lubricant market is moving from API CF monogrades to higher TBN SAE 15W-40 multigrades with performance levels equating to API CG/CH-4. There is also a transition, although far slower, toward API CJ-4 performance levels with lower ash content. Burton said the transition in the passenger car and heavy-duty engine oil markets is supported by capacity additions, citing Takreers (Abu Dhabi National Oil Co.) planned annual production of around 537,000 tons of Group II and III base stocks as well as Luberefs expansion of their Yanbu, Saudi Arabia, refinery that he said is set to produce around 770,000 t/y of Group II base stocks from 2016.

Although the recently opened SK-Repsol plant in Cartagena, Spain, is not located in the region, Burton believes the 630,000-ton Group II and III plant is in easy reach of the Middle East. According to LubesnGreases estimates, Group II and III base stocks will account for 50 percent of production in the Middle East and Africa, excluding imports from the SK-Repsol plant. That is a high proportion, when we just look at the Middle East itself, Burton added.

Issues Driving the Automotive Market

The main issue affecting the automotive industry is emissions regulations, which have led to the introduction of aftertreatment devices on vehicles and produced some challenging targets. Burton noted, Aftertreatment devices could be negatively affected by certain components within the lubricant. This could be either a chemical effect such as the poisoning of a catalyst or a physical one like the blocking of a particulate filter by the ash in the lubricant. All of this has driven us to lower levels of sulfated ash, phosphorus and sulfur – that is, low-SAPS – lubricants.

The emissions imperative has also led to some innovations in engine design, including downsizing and the increased use of turbochargers or superchargers. We are also seeing some changes in the engine hardware itself and how the engines run, Burton said. Innovations like cylinder deactivation are being used when the engine is not under heavy loads.

Another key driver is fuel economy in the heavy-duty diesel engine market where fuel comprises a significant part of fleet operating costs. It is most evident in certain parts of the world where fuel prices remain high despite recent drops in crude oil prices, and at a time when many economies are suffering. Burton said that although oil in itself is an expensive component of operating costs, vehicle downtime could be the most expensive part of operations.

There is also a globalization of engine oil specifications as original equipment manufacturers strive for consistent lubricant quality around the world. This has been accompanied by a global upgrade of vehicle fleets, leading to more modern vehicles with requirements for low-SAPS lubricants as well as longer drain intervals.

Its the Economy

Fuel economy legislation is finally reaching international convergence despite starting from different positions. Although some differences continue, the trend is consistent, and anticipated targets are broadly the same, Burton said.

In Asia-Pacific, countries like China and South Korea are following the initiatives of Europe, the United States and Japan in tightening light-duty fuel economy legislation to reduce carbon dioxide emissions. In the Middle East, developments in North American API specifications resonate in the local market because the regional vehicle fleet is largely comprised of vehicles from U.S. automakers.

In North America, grades heavier than SAE 10W-30 have a minimal market share while SAE 5W-20 accounts for almost one-quarter of the market. Just over one-half of the market is taken by SAE 5W-30 viscosity grades. Burton said the situation is not expected to change markedly until new specifications currently under development in the U.S. take effect.

Legislation in the heavy-duty diesel market has extended to particulate matter and nitrogen oxides, said Burton. So far, we have not seen fuel economy legislation, but if we look back to the early 2000s, there was much more headroom in terms of particulate matter. And the market has progressed significantly since then.

However, he added, the emphasis is now on fuel economy, and PC-11 introduces new viscosity grades to comply with global regulations. We are moving below 3.5 centiPoise high-temperature, high-shear viscosity for the first time in a North American specification. The trend will continue with the PC-11B specification, which will be lighter grade SAE xW-30 viscosity with HTHS levels between 2.9 and 3.3 cP, he added.

In the North American heavy-duty diesel market, API CI-4 and CI-4 Plus account for around 20 percent of the market with the remainder being API CJ-4. But the market is dominated by SAE 15W-40 viscosity grades.

In Europe, the Middle East and Africa, Burton said the lubricants market is gradually evolving toward thinner viscosity grades. We are seeing a transition from the thicker grades with all mineral specifications like 20W-50s and 15W-40s, moving to SAE 10W-40 with part synthetic formulations. Here, you could see up to 30 percent API Group III in the formulation along with Group I and II base stocks. The market is also moving toward an all synthetic base stock mix if Group III is treated as a synthetic base stock, Burton added.

Burton claimed that the pace of transition in the Middle East is slower. In the Middle East and Africa, we are not seeing the drive for the ultralow viscosity grades, but we are seeing movement from thicker grades and monogrades on the heavy-duty diesel side to thinner multigrades with part synthetic and synthetic formulations.

Irrespective of the pace of transition, Burton said there is no doubt lubricants are a key enabler for addressing the challenge of greater fuel economy. Better quality base stocks permit lighter viscosity grades, and additives provide fuel economy and other performance improvements. Together in a formulation, these components provide fuel economy and improved performance at reduced cost.

Middle Easts Dilemma

Burton said the move seen elsewhere to higher quality base stocks presents some hard choices for the region. He pointed to the growing prevalence of 0W and 5W grades with HTHS viscosities as low as 2.6 cP that require Group III or higher base stocks. On one hand, we want to balance fuel efficiency with wear protection. On the other, we do not want to compromise wear protection because there comes a point where you will not get more fuel efficiency by making the formulation thinner, he said. The key issue, Burton argued, is how to make the applications for the higher quality base stocks relevant to the Middle East.

It is a big risk for the region as specifications for base stocks begin to change, Burton said. These changes increase complexity, and some of the negative consequences include higher development costs associated with running expensive engine tests and the potential for a low return on investment. There is also a chance of misapplication by consumers and mechanics as the number of specifications increases, particularly if the lubricant chosen cannot protect an older engine.

Perhaps most important, consumers may become confused and reluctant to upgrade. It is well known in the industry that consumers in the Middle East frequently follow their own rules with regard to drain intervals. And despite the upgrade to the vehicle fleet, a lot of older vehicles are still in service that are not capable of dealing with new viscosity grades.

Burton said the ideal solution is a scenario where OEMs, additive companies and oil companies collaborate. With oil prices predicted to slide to U.S. $70 per barrel by 2020, the industry will be under intense pressure to eliminate product redundancy while simultaneously delivering benefits that consumers both value and understand.