Base Oil & Lubricants Opportunity in India in 2010-11

Base Oil & Lubricants 

Opportunity in India 

in 2010-11 

Hussam Adeni 

Lubricant Specialist 

ExBPCastrol India 

Lube.specialist@gmail.com

Contents 

Component of the India Lube Market 

The India Lubricant industry 

The India Base Oil Industry 

The India Lube additives Industry 

Base oil manufacturing 

Hussam Adeni – Lube Specialist

The components 

for the India 

Lubricant market 


The Components - 

for the India Market 

• India – An opportunities galore 

• Vehicles in India 

• Production 

• Population 

• Fuel consumption 

• Geographical size 

• Lube market 

• Hussam Adeni – Lube specialist 

Hussam Adeni 


India – Opportunities galore 

2009-10 

• Third largest market in the world 

• Second largest market in Asia 

Pacific 

• Ranks after China and Japan 

• India market 1,900 million litres 

Hussam Adeni 



2009-10 - Economy 

• Area 

3.28 sq km 

• Population 1.166 million 

• Population density 354.7/ sq km 

• Vehicle population 114.9 million 

• 2 wheelers 82.5 million 

• Trucks & Buses 6.5 million 

• Cars 

15.0 million 

• Others 

10.9 million 

Hussam Adeni 


Vehicle population 2009-10 

• Total vehicle population 114.9 

million 

• 2 wheeler contribute about three 

fourths of the vehicle population 

• Approx. 72% vehicles are 2 wheelers 

• Used for multiple purpose 

• Personal and Public passenger transport 

• Personal & Public goods transport 

Hussam Adeni 


Vehicle population – 2009-10 

• Total vehicle population 114.9 

million 

• Approx. 72% vehicles are 2 wheeler 

• Passenger cars account for 13% 

• Buses and Trucks account for 5.6% 

Hussam Adeni 



• 72% vehicles - 2 wheeler 

• 13% vehicles – Passenger cars 

• 9.5% vehicles – Other 

• 5.6% vehicles – Buses and Trucks 

Total vehicle population 114.9 

million 

Hussam Adeni 



• 82.5 million - 2 wheeler 

• 15 million - Passenger cars 

• 10.9 million - Others 

• 6.5 million – Buses and Trucks 

Total vehicle population 115 

million 

Hussam Adeni 


Motor Fuel demand in India 

• Major Fuels 

• Gasoline or Motor spirit ( called 

Petrol) 

• Diesel – HSD ( High Speed Diesel) 

• LPG – Gas vehicles 

• CNG - Gas vehicles 

• Demand for Gas likely to pick up 

Hussam Adeni 




• Gasoline or Motor spirit ( called 

Petrol) 

•Consumption – 12.5 million tons 

Hussam Adeni 




• Diesel – High Speed Diesel 

•Consumption – 55.1 million tons 

• An estimated 2% probably 

used to “adulterate” gasoline 

Hussam Adeni 




•LPG – Liquefied Petroleum Gas 

• Allocated for domestic use in 

cooking and carries subsidies 

•CNG – Compressed Natural Gas 

• Retailed at Gujarat and Delhi 

• Demand picking up due to lower costs. 

• Consumption data negligible but mixed 

up with non transport use 

Hussam Adeni 


Environmental issue 

- Motor fuels 

• Diesel – Sulphur content 

• Till Jan 2000 – 2500 ppm Nationwide 

• Urban centres – 500 ppm 

• By 2005 - 500 ppm Nationwide 

• By 2010 - 250 ppm Nationwide 

• Apr 2010 - 50 ppm 11 Cities 

Hussam Adeni 


Environmental issue 

- Motor fuels 

• Gasoline – Sulphur content 

• Till Jan 2000 – 1000 ppm Nationwide 

• Urban centres – 500 ppm 

• By 2005 - 500 ppm Nationwide 

• By 2010 - 150 ppm Nationwide 

• Apr 2010 - 50 ppm 11 Cities 

Hussam Adeni 


The India 

Lubricant market 


Lube consumption 

- Major sectors – 2009-10 

• India Lube market 1,900 m* 

• Transport Sector - 52% 

• Non Transport sector - 47.9% 

* Lube market - 2009-10 : 1.900 million litres 

Hussam Adeni 



- Major sectors 


• Transport Sector - 52% 

•Diesel Lubes is 70% 

•Petrol Lubes is 30% 

• Non Transport sector - 48% 

• Industrial 

• Maintenance, Process, Manufacturing 

Hussam Adeni 



- Transport sectors 


• Transport Sector - 52% 983 million Lt 

• Passenger cars – 211 million Lt 

• 2 & 3 wheelers – 145 million Lt 

• Trucks & buses – 313 million Lt 

• Agriculture/Tractor – 60 million Lt 

• Railroad Oils - 64 million Lt 

• Marine eng/DG Sets – 69 million Lt 

• Auto transmsn fluids – 69 million Lt 

• Others 

- 40 million Lt 

Hussam Adeni 



- Non Transport sectors 


• Non Transport Sector - 47.9% 

• Approx 902 million Lt 

• Industrial oils – 762 million Lt 

• Greases - 95 million Lt 

• Others 


Hussam Adeni 


Lubricant 

- Market shares in % 

• Indian Oil 24% 

• Hindustan Petroleum 12% 

• BPCastrol 10% 

• Bharat Petroleum 11% 

• Others 17% 

• Shell 5.0% 

• Valvoline & Valvoline 3.2% 

• Total 3.0 % 

Hussam Adeni 


Lubricant 

- Market shares in % & Mil. Lt 

• Indian Oil 

24% - 449 m Lt 

Hind Petroleum 12% - 215 m Lt 

• BPCastrol 

• Bharat Petro 

10% - 184 m Lt 

11% - 196 m Lt 

• Others 17% 

• Shell 

5.0% - 90 m Lt 

• Valvoline & Tidewater 3.2% - 60 m Lt/each 

• Total 

3.0 % - 56 m Lt 

Hussam Adeni 


Lubricant 

- Annual Blending capacities 

• Indian Oil 

430 million Lt 

Hindustan Petroleum 350 million Lt 

• BPCastrol 


• Bharat Petroleum 125 million Lt 

• Others 


Total capacity: 1600 million Lt/Year 

Hussam Adeni 


The Base Oils 

Industry 



• Group I 

• - Capacity 805 million Lt/Yr 

• - More than 990 million Lt/Yr imported 

• Group II* 

- Capacity 460 million Lt/Yr 

• Group III 

- Nil 

* BPCL Mumbai: 150 m/Lt Yr Hydro-cracking unit executed. 

and on stream on 1 st Qtr 2006 

Hussam Adeni 



• Group I 


• Hind Petroleum – 200 million Lt 

• Mumbai Refinery 

• IOC - 


• Haldia 

• IOC L /Madras Petro - 270 million Lt 

• Chennai 

• BPCL 


• Chennai 

Hussam Adeni 


Target Market – Base Oils 

• Group I 

• - Shortfall is 850 million Lt 

• - Met by imports from 

• Iran 

• Dubai ( Traded) 

• Other Middle East countries 

• Far East and Aspac 

Hussam Adeni 



• Group II 


• Hind Petroleum – 

• Mumbai Refinery 

• IOC - 

• Haldia 

• BPCL 

• Chennai 




Hussam Adeni 


Base oil - Supply & demand 

2006 - 2009 

Source 2006 2007 2008 2009 

Market 

Reqd. 

Local 

supply 

Shortfall 

Hence 

Imported 

1544 1690 1712 1900 

863 1030 967 989 

681 660 750 850 

Hussam Adeni 


Base Oil - Grade 

Pricing Hyderabad – in INR 

IOC/HP - Ex Mumbai/Chennai Apr 2011 

IOC/HP 

or ExChennai 

Group I 

Per Lt in bulk 

Group II 

Per Lt in bulk 

Ex Mumbai 

SN 100 60 - 62 62 - 65 

SN 150 60 - 62 63 - 66 

SN 500 60 - 62 _____ 

BS 150 80 - 82 ______ 

Payment terms 

Packing 

Freight 

Advance DD/Cheque 

20 KL tankers 

2.00/Lt ExMumbai, 1.50/Lt ExChennai 

Hussam Adeni 


The Lubricant 

Additive Industry 


Additive manufacturing 

• Capacity 55 million Kg/Yr 

• Lubrizol 

• - Mumbai 

• Indian Additives 

• - Chennai 

Hussam Adeni 




• Lubrizol 

• 50% JV – IOC & Lubrizol USA 

• 45 million Kg/Yr 

• - Mumbai 

Hussam Adeni 




• Lubrizol 

• 50% JV – IOC & Lubrizol USA 


• Mumbai 

• Indian Additives 

• 50% JV IOC & Chevron Oronite 


• - Chennai 

Hussam Adeni 


How Base Oils 

are manufactured 


How are Base Oils made 

• By far, the bulk of lubricants are blended from 

petroleum base-stocks. 

• The starting point is Crude Oil 

• Crude oil or petroleum is the term for "unprocessed" 

oil 

• Crude oil is a fossil fuel, meaning that it was 

naturally made from decaying animals & plants 

living in ancient seas millions of years ago. 

• Anywhere you find crude oil was once a sea bed. 

• Crude Oil colour varies from clear to tar-black & it 

ranges from water-like to almost solid 

Hussam Adeni 


How are Base Oils made 

TYPICAL COMPOSITION (weight %) 

– Carbon 84% 

– Hydrogen 14% 

– Sulphur 1- 5% 

– Other (Nitrogen, Oxygen, Metals, Salts) 

Distillation process 

• A refinery process known as Atmospheric 

Distillation boils off all the low-boiling 

materials which are then condensed and 

used as fuels. 

• A second distillation process, Vacuum 

Distillation, under reduced pressure produces 

high boiling fractions -vacuum gas oils - 

known as “Feeds”. 

Hussam Adeni 


The Distillation Process 

“Feeds”. 

Rising vapours 

condense and 

are drawn off 

The value of crude 

oil can only be 

realized once it 

has been cleaned 

up (de-watered 

and de-salted) and 

separated into 

various fractions of 

similar 

hydrocarbons. 

Hussam Adeni 


Typical yields 

• The Average production from a barrel of crude oil is: 

• Gasoline 44% 

• Distillate (home heat, diesel) 21% 

• Kerosene-type jet fuel 9% 

• Other (e.g., residual fuel oil, coke, asphalt) 25% 

• Lubricant feedstock 1% 

• So-called “Lube Crudes” will yield higher amounts of the vacuum 

distillates that go to make up lubricant Feedstocks, or “Feeds”. 

• Feeds are the starting point for producing Base Stock 

Hussam Adeni 


What is Base stock 

• Base Stocks are the 

refined oils (derived from 

crude oil) which are 

blended together with 

additives to produce a 

finished lubricant. 

• Base Oils are complex 

mixtures of hydrocarbons 

• The actual composition is 

influenced by the refining 

technology used 

Hussam Adeni 


Types of Base stock 

• Base-Stocks of different viscosities are the 

fundamental building blocks of finished lubricants. 

• The processes to make base-stocks can be 

relatively mild, simple & straightforward as in the 

case of older style Solvent Refined (API Group 1) 

base-stocks, or: 

• They may be quite complex and severe in terms of 

their process conditions, as is the case Hydro- 

Treated and Hydro-Cracked base-stocks (API 

Groups 2 and 3) 

Hussam Adeni 


API Groups 

• The American Petroleum Institute (API) has 

developed numerical classifications (API Base 

Stock Groups) for lubricant base stocks, based on 

– Sulphur content, 

–composition, 

–VI. 

Hussam Adeni 


API Groups –Typical values 

Group Wt % 

Sulphur 

Wt % 

Saturates 

VI 

I › 0.03 ‹ 90 80 - 100 

II ‹ 0.03 › 90 80 - 119 

III ‹ 0.03 › 90 120+ 

IV 

V 

Synthetic POA 

Other synthetics ( Diesters,PAG,) 

Hussam Adeni 


API Groups 

• Why do we “slot” base stocks into API groups? 

• Remember that base stock is a key building 

block of the final lubricant . 

• Group designations are a guideline to 

applications and formulation requirements 

Hussam Adeni 


The API Group I Base Oils 

• Group I: 

Is the lowest quality level with viscosity 

indexes (VIs) in the range 80-100+, but 

usually below 100. Solvent refined base 

stocks fall into this category. 

Hussam Adeni 



• The older refining processes involved little or no 

chemical alteration of the crude oil components. 

• They involved removal by distillation the light and 

heavy portions of the crude oil which are not of any use 

for lubes, and then removing the impurities and 

undesirable wax from the remainder by a process 

called “Solvent Refining” (SR). 

• Solvent was percolated through the oil to remove 

impurities, and the oil then chilled to low temperature 

with a second solvent to remove wax as an insoluble 

solid which could be filtered off. 

Hussam Adeni 



• The resulting oils still contain significant 

amounts of coloured impurities, as well as 

dissolved waxes. 

• These oils are only moderately stable by modern 

standards, suffer from poorer physical properties 

(e.g.low-temperature viscosity, high temperature 

volatility) and VI values were modest. 

• This process produces API Group I base 

oils 

Hussam Adeni 


The API Group II Base Oils 

• Group II & II+: 

Applies to base stocks with low impurity levels, 

and VIs from 80 to 100. Most HT base stocks 

are Group II and have typical VIs of 95-105. 

Products with VIs in the 110 to 119 range are 

sometimes referred to as Group II+ to 

distinguish them from other Group II products. 

HC/IDW base stocks are Group II+, with the 

remainder being Group III 

Hussam Adeni 



• API Group II & Group III base stocks are 

manufactured by means of processes called severe 

Hydro-Treating (HT) & Hydro-Cracking (HC). 

• HT base stocks fall under the definition of API Group II. 

• Hydro-Cracked /IDW base stocks are API Group II+/III. 

• After the initial separation of the crude oil by 

distillation, the above two processes are used to 

chemically alter and improve the base-stock 

molecules. 

Hussam Adeni 


The API Group II,II+,III 

• Both processes subject the oil fractions to 

hydrogen gas under high-temperature, highpressure 

conditions over a catalyst 

• The resulting lube oils still contain undesirable 

wax at this stage. It may be removed by 

• Typical solvent dewaxing, 

• or by a modern process known as Iso dewaxing (IDW) 

• or Hydro-Isomerisation, which is highly effective. 

Hussam Adeni 



• Group II & II+: 

• Applies to base stocks with low impurity levels, 

and VIs from 80 to 100. Most HT base stocks 

are Group II and have typical VIs of 95-105. 

Products with VIs in the 110 to 119 range are 

sometimes referred to as Group II+ to 

distinguish them from other Group II products. 

HC/IDW base stocks are Group II+, with the 

remainder being Group III 

Hussam Adeni 


HT and HC base oils 

• The resulting oils from these processes are 

water-white, and over 99% pure in terms of 

hydrocarbon content. 

• Undesirable impurities, such as 

• Sulphur, 

• Nitrogen, 

• and Oxygen compounds, 

are either completely absent, or are present in 

trace amounts in ppm (parts per million). 

Hussam Adeni 


HT, HC & Isodewaxed oils 

• In the case of Iso-DeWaxed (IDW) oils, the wax 

has been chemically converted to very useful 

lubricant with excellent low temperature 

properties. 

• Thus, for both HT and HC/IDW, the base 

stocks produced are much more stable with 

lower wax content, good low temp properties, 

and improved volatility characteristics. 

VI values for HT tend to be High. For HC/IDW, 

they are Very High- hence VHVI. 

Hussam Adeni 


The API Group III and IV 

• Group III & IV: 

• Group III: Applies to base stocks of saturated 

hydrocarbon composition, very low impurity levels, and 

very high VI (VHVI), above 120. Lubricants formulated 

from Group III base stocks can be referred to as 

synthetic. Select HC/IDW base stocks fall into this 

category. 

• Group IV: Refers to fully synthetic base stocks, 

(e.g.PAOs). 

Hussam Adeni 



2009-10 

• Third largest market in the world 

• Second largest market in Asia 

Pacific 

• Ranks after China and Japan 

• India market 1,900 million litres 

• Lube market worth INR 285,000 

million 

Hussam Adeni 


India – An opportunities galore 

based on 2009-10 data 

Thank you 

Hussam Adeni 


Hussam Adeni 

– Lube Specialist 

Web links & certifications 

Slideshare: http://slidesha.re/tB0M3Q 

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Base Oil & Lubricants Opportunity in India in 2010-11

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