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A Fast Track to Group III Base Oils
14 June 2011
ICIS Asian Base Oils and Lubricants Conference - Seoul, Republic of Korea
Harry KwonMarketing Manager
Contents
1. Engine Oil Future Trend
2. Base Oil Future Demand
3. SK’s Future Expansion Plans
4. Conclusion
1
2
Engine Oil Requirements
Long Drain
Interval
Fuel Economy
EmissionControl
Long Drain
Interval
FuelEconomy
Oil + FMStability
High Temp
Viscosity
High VI Base Oils
MaintainOptimumViscosity
Engine Oil Requirements
PerformanceDemands
DesirableProperties
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EngineProtec-
tion
FuelEconomy
LowVolatility
LowerSAE
Viscosity
Low Temp
Viscosity
LowerFrictionEngines
Easier start-up/warm-up
Engine Oil Requirements
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PerformanceDemands
DesirableProperties
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Engine Oil Requirements
EmissionControl
LowMetal/P/S
Lower SAPS
※ SAPS = Sulfated Ash, Phosphorus and Sulfur
PerformanceDemands
DesirableProperties
Governments Lead Innovation – USA
Miles per gallon 2011 CAFE 2016 CAFE
Cars 27.5 42
Light duty trucks 24 26
Combined Fleet 27.3 35.5
53 %Increase
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Gasoline engine CAFE requirements by 2016
35.5 mile per gallon (≒15.1 km/L).U.S. Government
19 May 2009
※ CAFE = Corporate Average Fuel Economy
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Governments Lead Innovation – USA
※ EPA = Environmental Protection Agency ※ NHTSA = National Highway Traffic Safety Administration
EPA & NHTSA : 25 October 2010New HD Diesel Vehicles Program
Fuel efficient HD diesel engine oils
– Lower operating viscosities: 5W-40, 5W-30, 0W-30
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2012130g
CO2/km202095g
CO2/km
Governments Lead Innovation – Europe
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New Global Standard – ILSAC GF-5
First licensing date : 1 October 2010
Sequence VID : New fuel economy engine test- Aged oil low temperature viscosity limits- Stronger engine protection & stronger protection
of emission control systems
※ ILSAC = International Lubricant Standardization and Approval Committee
10Source: Motor Information Systems: 2009 and 2010 model years
OEM Movement to Lower Viscosity
OEM OW-20 5W-20 5W-30
Toyota 1.8L, 2.4L, 2.5L, 2.7L, 4.0L, 4.6L, 4.8L, 5.7L Main Grade
1.5L, 3.5L
Ford Cars, TrucksMain Grade
4.0L5.4L (5W-50)
GM, Chevrolet Cars & Trucks Main Grade
Honda Civic Hybrid: 1.3L, Insight Main Grade
Nissan AltimaHybrid 2.5L Main Grade
Hyundai Main Grade
ChryslerMain Grade
2.4L turbo (xW-40)
3.5L (10W-30)
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Group III
Mid SAPS
OEM
C2
Value
5W-305W-40
Low SAPS
C4 +OEM
C1
Group III
5W-30
Performance
Top Tier
Market Structure – Western Europe
Source: The Lubrizol Corporation, 2010
Premium market tier
5W-30 “lower SAPS” engine oils
Group III Base Oil Only
HIGH HTHS (>3.5cP)
LOW HTHS (<3.5cP)
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PCMO Demand Change by Viscosity Grade – Western Europe
Source: The Lubrizol Corporation, 2010
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HDEO Lube Quality Upgrade – China
Source: Infineum Trends 2010
High Tier : API CG-4 and aboveLow Tier : API CF-4 and below
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PCMO Lube Quality Upgrade – China
Source: Infineum Trends 2010
High Tier : API SL and aboveLow Tier : API SJ and below
Contents
1. Engine Oil Future Trend
2. Base Oil Future Demand
3. SK’s Future Expansion Plans
4. Conclusion
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Global Demand for Base Oil
UNIT : KTPA
-
1,000
2,000
3,000
4,000
5,000
6,000
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2006 2009 2012 2015
Base Oil Total Global Group III Base Oil
Group III Demand
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Base Oil Demand – North America
UNIT : KTPA
400
500
600
700
800
900
1,000
1,100
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2006 2009 2012 2015
Base Oil Total Group III Base Oil
Group III Demand
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Base Oil Demand – Western Europe
UNIT : KTPA
100
200
300
400
500
600
700
800
900
1,000
1,100
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2006 2009 2012 2015
Base Oil Total Group III Base Oil
Group III Demand
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Base Oil Demand – Asia Pacific
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2006 2009 2012 2015
Base Oil Total Group III Base Oil
UNIT : KTPA Group III Demand
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Motor Vehicles/Lubricant Demand – China
UNIT : MILLION
Source: The Freedonia Group, Inc.
-
2,000
4,000
6,000
8,000
10,000
12,000
-
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
1997 2002 2007 2012 2017
Motor Vehicles in Use Lubricant Demand
UNIT : KTPA
Lubricant Demand
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-
500
1,000
1,500
2,000
2,500
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
1997 2002 2007 2012 2017
Motor Vehicles in Use Lubricant Demand
Motor Vehicles/Lubricant Demand – India
UNIT : MILLIONUNIT : KTPA
Lubricant Demand
Source: The Freedonia Group, Inc.
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5.0%
59.0%
36%
2006
Group III Base Oil
Group I Base Oil
Others
Group III Base Oil Share Increase
17.7%
37.0%
45.3%
2015
Group III Base Oil
Group I Base Oil
Others
Contents
1. Engine Oil Future Trend
2. Base Oil Future Demand
3. SK’s Future Expansion Plans
4. Conclusion
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Current Status & Future Expansion
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`14. 1Q
`12. 2H
SK is the largest Group III Supplier in the world
Future Capacity = Current Capacity X 2
Production Capacity
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`95
Revamp
`01
Revamp
`04 `06 `08 `12.1H
Revamp
`12.2H `14 ~
#1
#2
#3
#4
#52,750K MT
1,360K MTAS-IS (2011)
TO-BE (2014)
+500K MT
+650K MT
+ 240K MT
YUBASE Global Network
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Indonesia
Ulsan
Tokyo
Amsterdam
Houston
Jakarta
Seoul
Plants Branches Terminals Agents/Distributors
Contents
1. Base Oil Market Trend
2. Base Oil Future Demand
3. SK’s Future Expansion Plans
4. Conclusion
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Conclusion
Long Drain
Interval
Fuel Economy
EmissionControl
Group III Base Oil
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Conclusion
UNIT : KTPA
-
1,000
2,000
3,000
4,000
5,000
6,000
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2006 2009 2012 2015
Base Oil Total Global Group III Base Oil
Group III Demand
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Conclusion
The capacity of SK Lubricants will be more than double ofcurrent capacity and SK Lubricants will give more stable
supply for customers.
Thank you for your attention
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