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Changing Global Energy Mix

Growth of Gas

Modern Gas Engines

Lubricant Formulations

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Global Trends – Changing Global Energy Mix

Energy demand grows 1.2% to 2040

95% of the anticipated increase from developing countries

• China & India >50% of this growth

Slowdown in demand for oil and coal

Gas becomes 2nd largest energy source

Renewables 7.4%/yr growth

Natural gas will experience the largest demand growth

Changing Fuel Sources for Power Generation

Global electricity demand grows 60% 2016-2040

Demand for lower carbon energy means energy source shifts

Natural gas grows significantly

• Increased demand from OECD, China and

countries where it is domestically available

• Use of waste gas will rise

Biomass, waste gas and coal could dampen demand

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Chart Source: ExxonMobil 2018 Outlook for Energy

Growth of Gas

Global gas growth drivers

• Environmental regulations

• New gas-fired power stations

• Improved position vs. coal

Future demand growth

• Power generation

• Industrial use

• Residential & commercial

• Transportation

Increase in high efficiency reciprocating

gas engines

Chart Data Source: 2018 OPEC World Oil Outlook, September 2018: www.opec.org.

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Energy Demand from Gaseous Fuels

Eurasia Developing OECD

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End-User RequirementsReliability over engine lifetime

• Robust lubricant technology

• Oil change at standard maintenance interval

• Minimize downtime

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Sour gas operation - additional challenges

• More acidic/abrasive

• Deposit, wear, corrosion control

New formulations needed to meet end-user requirements

Deposit control & acid neutralization is

essential

Modern Gas EnginesDesign changes for improved efficiency

• Higher BMEP • New piston design

• Larger turbo chargers • Combustion strategy

Profitable recycling of waste gas to electricity

• Land fills • Biogas digesters

• Severe environment for lubricants

Increased downtime & costs

Shorter oil lifeIncreased deposits

Lubricants must work harder for longer

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Forecast of Natural Gas Engine Installed by Power Rating

Sustained worldwide gas growth based on:1. Government pushing for gas utilisation to reduce

environmental impact

2. Increasing demand for local based gas

3. Modernisation of old plants

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Forecast for key countries, 2018

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NOTE: Includes only statinary power generation capacity and does notinclude transmissionengine installed capaicySource: Delta-ee

Russia implementing larger power rating

engines to meet the total load requirements

Estimated Market Share of Natural Gas OEMs in New installations*, 2016 to 2018

Main suppliers:

• GE (INNIO)

• Caterpillar/MWM

• Third Supplier, depending on the

specificities of the considered country:

- Germany: MAN

- China: Shengdong

- Russia: Wartsila

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*Stationary gas engines only Source: Delta-ee

Formulating for Optimised Performance

High temperature deposit control

• Chemical structure of soot requires unique

formulation approach

Extended lubricant life

• Enhanced oxidation and nitration control

Effective neutralization of combustion acids

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Formulation knowledge is

critical for performance

Formulating for Optimised PerformanceLARGE ENGINES

Formulation knowledge is

critical for performance

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Natural Gas: Need for Appropriate LubricantsLARGE ENGINES

• Group II widely used

• SAE 40 monograde mainly used

• SAE 15W-40 required to meet more

extreme conditions

Estimated NGEO Demand in Key Countries by Base Oil Type, 2018

Group II Group I Group III and above

Source: Kline & Co.

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Summary• Global gas consumption is projected to grow in all

sectors, particularly in the developing countries

• Clear trend to move to greener fuel, hence considering

natural gas but also biogas, landfill gas and other waste

gas as a source of energy

• Increased demand lead OEMs to improve engine

efficiency and power output while end users require

reliability over engine lifetime and minimization of

the downtime

Severe environment leads to need for optimised lubricants, working

harder and over a longer time