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Singapore poised to host 'world's largest base oil plant of its kind'

Singapore

EXXONMOBIL'S base-oil plant is set to emerge as the largest of its kind in the world after a multi-billion dollar expansion lined up for its integrated manufacturing facility gets the go ahead.

Ted Walko, the company's global marketing manager for base stocks and specialties, told The Business Times that the plant, which is progressing towards a final investment decision in the first half of 2019, will enter into production by 2023.

He described the plant as a "game-changer" for ExxonMobil: "With its significant scale, its unit cost for base-oil production will be among the lowest in the industry."

Base stocks or base oils are commonly used for blending finished lubricants used to oil engines in vehicles, ships, planes and industrial plants.

ExxonMobil has already embarked on expansion of its base-oil manufacturing plants in Rotterdam in the Netherlands and Baytown in Texas in the US. Such expansion efforts are geared towards meeting the demand for these lucrative products, which springs from two sectors that have been expanding rapidly in Asia - transport and manufacturing.

Asia now lays claim to being the manufacturing centre of the world, and motor-vehicle ownership in the region is growing at an astounding pace, particularly in China and India.

Clearly, ExxonMobil's base-oil plant in Singapore is in a good position to tap the demand in the Asia-Pacific, but the supermajor has other plans lined up in its latest expansion project. It is looking to apply advance technology that will enable the production of a high-viscosity Group II base stock.

Mr Walko said: "ExxonMobil is exploring new applications beyond traditional lubricants like tyre-extender oils and cosmetics with the launch of this high-viscosity Group II base stock."

The plan is to produce this new base stock in Singapore and export the output to the rest of the world.

Beyond these new applications, the supermajor is seeking to expand its capacity for production of clean fuels with lower sulphur content. This is in response to a slew of new regulations, including the International Maritime Organization's global sulphur cap. In October 2016, the organisation confirmed the imposition of a 0.5 per cent cap on sulphur content in marine fuels by 2020.

Mr Walko said that, with these regulations, consumers have come to realise lubricants blended with Group II base oils "can meet more stringent specifications" and deliver "sustainability benefits such as reduced emissions and better fuel economy".

BT understands for instance, that vehicles using lubricants blended with Group II base oils can run for longer distances before the next change of engine oil, compared to those using lubricants blended with Group I base oils.

Mr Walko suggested that henceforth, certain Group I base oil producers with low conversion rates - or which cannot switch gears to produce other groups of base oils - are facing pressure "to rationalise their operations"; conversely, Group II base oil producers such as ExxonMobil "will see greater demand for their products".

More details of how this multi-billion dollar expansion may affect ExxonMobil's current operations along Pioneer Road and on Jurong Island are expected to emerge when the project hits its final investment decision next year. This expansion marks the most significant of ExxonMobil's series of investments in base-stock production in Singapore.

Last year, ExxonMobil unveiled the expansion of its Singapore refinery to upgrade production of its proprietary EHC Group II base stocks. That project is set to be commissioned in early next year.