BASF dates its founding to 1865 when Friedrich Engelhorn, owner of a coal gas company in Mannheim, Germany, established Badische Anilin- & Soda-Fabrik to produce soda ash used in soap, along with magenta and aniline dyes for the textile industry. After the planned acquisition of a site in Mannheim fell through, Engelhorn built his manufacturing facilities on the opposite side of the Rhine River, in Ludwigshafen.

From that humble beginning, BASF has grown into one of the worlds largest chemical conglomerates, with 2012 sales of 72.1 billion and over 110,000 people employed in plants around the globe. Yet until quite recently the company played only a small role in the lubricants industry, and vice versa.

Those lubricant activities were established with the acquisition of Wyandotte Chemicals Corp. of Wyandotte, Mich., in the mid-1960s. This purchase gave the company a small position in synthetic lubricants, especially polyalkylene glycol hydraulic fluids sold under the Plurasafe brand. These PAGs were sold in Europe and North America from plants located in Wyandotte and Geismar, La.

Wyandotte Chemicals had a strong position in chemical raw materials such as ethylene and propylene oxide as well as polyurethane chemistry, said Martin Widmann, the senior vice president who was tapped on Oct. 1 to lead BASFs Fuel and Lubricant Solutions global business unit. Combined with the expertise at BASF, these products opened the door to producing specialty chemicals such as crop protection agents and organic intermediates.

The 1969 acquisition of German oil and gas producer Wintershall brought a small mineral oil base stock refinery. The company divested the Wintershall lubricant business and the refinery, in 1994. It also exited the European market for synthetic hydraulic fluids between 1995 and 1998, retaining only the Plurasafe PAG business in the United States.

BASF made a splashy reentry into lubricants in April 2009 with the $5.1 billion acquisition of chemicals rival Ciba, and proceeded to integrate Cibas lubricant additives with its own Plurasafe and other specialties to create a new business segment. This integration broadened our product scope and technical knowledge, said Stefan Wolff, vice president and head of the business units global marketing and product development. It also expanded our R&D capabilities through the addition of a lubricant additives development center in Tarrytown, New York.

Ciba, then Cognis

BASF already had good access to major oil companies and chemical houses with its mineral oil additives and automotive fluids. Since most of these customers are also active in the lubricant area, the acquisition enabled it to better position Cibas lubricant additives portfolio.

Although some former Ciba customers may have felt uneasy that the German giant would compete with them in the marketplace, Widmann said these concerns were unfounded. We do not have the expertise and do not intend to offer fully formulated engine oils or engine oil packages, he told LubesnGreases. Therefore, we will not become a [additive] package house. He added that BASFs aim is to use its synthetic base stocks and additive components to help improve the performance of its customers finished lubricants and additive packages.

In 2010, BASF went shopping again. This time it bought fellow German Cognis for $3.8 billion and integrated its synthetic base stocks and compounded lubricants into its automotive and refinery chemicals segment, along with engine coolants, brake fluids, polyisobutenes, fuel additives and refinery chemicals. This strengthened our position across the lubricant value chain, said Widmann, and led BASF to rename the business Fuel and Lubricant Solutions.

Only at this time did the lubricant and additives business become strategic, Wolff added. The acquisition of Cognis completed our portfolio and made us a comprehensive solution provider to the lubricant industry, with the strategic intent to expand in targeted markets as a leading and first-choice supplier.

We are active globally in all regions with major facilities in Europe and North America, he added. However, following our existing and emerging customers in the industry, we expect to significantly grow our business in emerging Eastern European countries, South America, and particularly in Asia with a strong focus on China and India.

Linking with Verbund

Fuel and Lubricant Solutions is part of BASFs Performance Chemicals division, which had 2012 revenues totaling 3.6 billion. Performance Chemicals in turn is part of the Performance Products Segment (2012 revenues: 15.7 billion). All of the Performance Chemicals businesses target specific industries, but they share certain synergies as well. This is a concept BASF calls Verbund, a German word meaning linked or integrated to the maximum degree.

BASF has long been recognized for making the most of its integrated approach to manufacturing, research and overall management philosophy, said Widmann. Besides its production verbund, BASF also has established a knowledge verbund.

The production verbund includes products produced by steam cracking, base chemicals, specialty chemicals and externally sourced components. Based on BASFs production verbund and broad access to production capabilities, Fuel and Lubricant Solutions has a global production footprint with high supply reliability close to its customers, said Widmann.

The knowledge verbund consists of central research, application knowledge and testing facilities, such as a fuels and lubes competence center where products are evaluated. With regional R&D centers in North America, Europe and Asia, shared testing facilities, and cooperation with industry partners, we can offer technical service close to our customers, Widmann noted. Our knowledge verbund provides a unique platform to develop innovative products and solutions.

Verbund provides competitive advantages because it represents more than simple integration, stressed Wolff. It represents entire interlocking value chains, from chemical building blocks produced to a large extent for internal use, to specialty and fine chemicals. BASFs investments and acquisitions highlight more than market opportunities; they also demonstrate the expansion of value chains, a key concept for understanding verbund.

Massing its Assets

Fuel and Lubricant Solutions covers six product areas. Three (automotive fluids, mineral oil additives, polyisobutene) are traditional BASF products that together represent about 60 percent of the business. The Ciba and Cognis acquisitions brought significant assets in lubricant additives, base stocks, industrial surfactants and compounded lubricants, together representing about 40 percent of the business.

The business has major facilities in Ludwigshafen, Germany, Cincinnati, Ohio, Florham Park, N.J., and Nanjing and Shanghai, China, as well as Sao Paulo, Brazil. Research and development is mainly driven out of Ludwigshafen, Tarrytown, N.Y., and Shanghai. It employs several hundred people globally with a focus on development, marketing and sales.

Through our recent acquisitions, Widmann said, Fuel and Lubricant Solutions has extended its value chains, as well as formulation and application expertise, to lubricant additives, compounded lubricants, synthetic base stocks and components for metalworking fluids.

With the capabilities of the Ciba and Cognis acquisitions, added Wolff, we feel BASF now possesses an industry-leading position in the lubricant additive and synthetic lubricant markets. With the chemical knowledge for synthetic base stocks and differentiating lubricant additives, BASF has the capacity to support industry and customer requirements.

Key offerings for the global lubricants market today are:

Synthetic base stocks, such as Synative brand esters and Breox PAGs. Major end uses for these fluids are high-performance applications such as compressors and wind turbine gear oils.

Lubricant additives (many acquired in the Ciba acquisition) such as Irganox ashless antioxidants, Irgalube antiwear additives, Irgacor corrosion inhibitors, Irgalube friction modifiers, Irgamet metal deactivators and Irgaflo pour-point depressants/viscosity modifiers.

Synthetic finished lubricants, which include Cogniss Emgard family of gear, transmission and axle oils for transportation, especially heavy-duty trucks and locomotives; Emgard and Plurasafe gear oils, compressor oils and hydraulic fluids for industrial applications like construction machines and wind turbines; and ProEco biodegradable hydraulic fluids for environmentally sensitive areas like waterways.

Built on Understanding

As a chemical company, BASFs expertise is built on differentiating technologies and component chemistry, said Widmann. We offer innovative solutions for sustainability and support our customers to meet increasingly demanding industry specifications, such as ILSAC GF-6 passenger car engine oils and the proposed category for heavy-duty engine oils, PC-11. While BASF does not, he reiterated, supply fully formulated engine oils or engine oil additive packages, our expertise builds on understanding how synthetic base stocks and additive components can help improve the performance of the packages and engine oils of our customers.

As an example, Wolff pointed to a new ashless acid neutralizer additive for diesel engine oils. This additive helps increase oil drain intervals to reduce the burden on the environment, maintenance costs and the frequency of oil changes, he said.

The company also recently introduced Irgacor 843, a biodegradable, oil-soluble corrosion inhibitor that it says can be used at lower treat rates than competing products. Another innovation is Synative ES 1200 high-viscosity synthetic ester base stock, offered as an alternative to polyalpha-olefins; its also biodegradable and partly based on renewable resources.

And on the fully formulated lubricant side, our new fuel-efficient axle lubricant for heavy-duty applications helps reduce fuel consumption and the vehicles carbon footprint, said Wolff. Finally, we have developed several new compounded lubricants that help customers differentiate themselves in the marketplace.

An important part of our base stock portfolio is centered on renewable materials; that is, biodegradable esters for high performance, Widmann said. We will build this portfolio based on our expertise in synthetic base stocks and lubricant additives, and by combining Ciba and Cognis know-how and formulation capabilities. Add close cooperation with downstream customers, said Wolff, and the result will be just what the market ordered: high-value lubricants that are longer lasting and highly fuel efficient.

Getting Ahead

Our major challenge is that the lubricants market is highly fragmented. Therefore, we focus on innovative segments in the industry that require sustainable solutions and that fit our capabilities, said Wolff. Long-term partnerships play an important role. Besides the ability to support long-term development and approvals, customers demand high-quality products and performance, global supply capabilities and sound financials, all of which BASF provides.

Government regulations also pose a challenge in terms of environmental issues such as carbon footprint, emissions or safety. BASF addresses these issues by providing additional services, such as Eco Efficiency Analysis or REACH support. Widmann said.

Widmann noted that Fuel and Lubricant Solutions plans to leverage the legacy Ciba and Cognis technologies with BASFs knowledge of the mineral oil market and needs of the automotive industry. Comprehensive fluid management – that is, the offering of gear and axle oils, coolants, and brake fluids as well as fuel performance packages from a single source – will become more important, he said.

Sustainability is also very important, he continued. When we develop investment or R&D projects, we must show that what we are doing is sustainable or improves sustainability. At the end of the day, we want chemistry to be part of the solution not part of the problem.

Widmann concluded by noting that the organization has changed significantly from 20 years ago. Like many chemical companies, we were organized along chemical value chains. Now, we are organized by specific markets. We then look within the broad knowledge verbund to find the right solution for our customers.