April lubricants industry market update.

[Foxtrot08]

Penthol Declares Force Majeure on ADNOC Base Oil Supply​

Penthol has declared force majeure on its supply of AD base oil from ADNOC, citing the Iran conflict and continuing production and supply-chain disruptions.



In a July 15 notice to customers, Penthol said the disruption has resulted in the cessation of AD base oil supply from ADNOC and has affected its ability to meet contractual obligations. The company said the situation has materially affected, and could continue to affect, the production, transportation and supply of the base oil covered by its customer contracts.



The company cited transportation difficulties, unplanned outages, equipment failures, power disruptions, government actions, war-related events and reduced or unavailable supply at the customary source among the circumstances covered by the notice.



Penthol did not provide an estimate for when deliveries may resume. “The duration of the disruptions and cessation of supply is currently unknown,” the company said in the notice. Penthol added that it is monitoring developments and communications from ADNOC and evaluating alternative supply arrangements and logistics options to restore deliveries as soon as practicable.



The declaration represents another significant development for a Group III base oil market already facing uncertainty surrounding Middle East production, vessel availability and transportation through the region.



For U.S. lubricant manufacturers and marketers, the immediate question is whether existing domestic inventories can support demand while ADNOC supply to Penthol remains interrupted, and whether alternative Group III volumes can be secured.



The notice does not state that ADNOC has declared force majeure, nor does it indicate that ADNOC has halted all base oil production or shipments worldwide. It states specifically that Penthol’s supply of AD base oil from ADNOC has ceased.​

 

[melk]

 

[Foxtrot08]

Minor update. A major that does mostly OEM stuff in the U.S. has cancelled all existing and future aftermarket oil sales. Citing lack of group 3 availability.

Also in fun news. A new Dexos 1 Gen 3 viscosity - possibly Dexos 1 Gen 4. It’s now 0w-30. Will be the spec oil for Chevy / GM 1500s with certain engines. Starting September 1.

I heard that it was going to happen about a year and half ago, as we were supposed to be getting D1G4 by now. But that can had been kicked down the road a bit now. Long term it will be a consolidation of the 0w-20 and 5w-30 viscosity grades to just 0w-30 for GM. However, we will see if that consolidation ever happens.

 

[freakazooid52]

Minor update. A major that does mostly OEM stuff in the U.S. has cancelled all existing and future aftermarket oil sales. Citing lack of group 3 availability.

Also in fun news. A new Dexos 1 Gen 3 viscosity - possibly Dexos 1 Gen 4. It’s now 0w-30. Will be the spec oil for Chevy / GM 1500s with certain engines. Starting September 1.

I heard that it was going to happen about a year and half ago, as we were supposed to be getting D1G4 by now. But that can had been kicked down the road a bit now. Long term it will be a consolidation of the 0w-20 and 5w-30 viscosity grades to just 0w-30 for GM. However, we will see if that consolidation ever happens.

Would that be conoco Philips stopping aftermarket sales? Only big oil company I can think of that makes oem fluids for many oems In USA and has some aftermarket space through motor craft fluids but not a huge market compared to other brands on aftermarket shelves

 

[Foxtrot08]

Would that be conoco Philips stopping aftermarket sales? Only big oil company I can think of that makes oem fluids for many oems In USA and has some aftermarket space through motor craft fluids but not a huge market compared to other brands on aftermarket shelves

It’s not P66. It’s not any of the “US” majors.

 

[CleanSump]

Fuchs?

 

[RDY4WAR]

Fuchs?

They have no Fuchs to give?

I'll see myself out....

 

[Foxtrot08]

Fuchs?

Fuchs is technically an ILMA. The largest. But still an ILMA.


Also RIP to Petrocanada.

https://www.hfsinclair.com/investor...anadian-Base-Oil-Refining-Assets/default.aspx


Note: this is scheduled for the end of 2027. Not immediately.

 

[addyguy]

At a time of tightening base-oil production, I don’t understand getting rid of a base oil plant??
Will someone else buy and operate this?? It’s seems like in this market it’s a license for printing money??

 

[Foxtrot08]

At a time of tightening base-oil production, I don’t understand getting rid of a base oil plant??
Will someone else buy and operate this?? It’s seems like in this market it’s a license for printing money??

Economics.

Hollyfrontier imports VGO from other countries to make base oils. It used to be from Adnoc. But I do believe it’s now from other suppliers, I’ve heard the South Korea groups. I’ve heard Motiva. But I don’t know for sure right this moment.

Add in tariffs on Canadian products currently. The political situation between the U.S. and Canada.

Then add in the fact that by the end of 2027 (planned wind down time frame.) You will have online:

XOM - 8000 bpd group 3 expansion at Baytown, TX.
Chevron - 4000 to 6000+ bpd group 3 production in Pascagoula, MS.
Vertex - 4000 to 6000+ bpd group 3 production, mobile, AL.

Others that make / could make / may make Group 3s in the future:
Motiva, port Arthur, TX.
Excel Paralube, Lake Charles, LA.
Safety Kleen / KPP - East Chicago, IN.

So if their refinery catalysts for base oils are in need of a massive turn around, with an enormous replacement costs. Along with the economics of their feedstock. Tariffs and competition on their finished product. It’s probably not economical to be in the base oil business come 2028 and beyond. So they’ll convert that throughput to crude, make more distillates and such. The economic outlook on fuels is much more favorable currently. As the export market for Canada to Europe, or to the pan-Asian market. (Aus, Nz, etc.) is also very favorable.

Makes sense to me.

 

[addyguy]

Also, you said RIP to PetroCanada; is Petro Canada going to become a fuels-only part of Suncor, and this move means there won’t be any PC engine oil anymore?
Or will HF just produce PC-labelled oil at another plant?
Petro-Canada just recently acquired Canadian Tires gasoline business; CT ‘GasPlus’ stations are slowly becoming PC gas stations, and they sell PC oils…can’t see that disappearing??

 

[Foxtrot08]

Also, you said RIP to PetroCanada; is Petro Canada going to become a fuels-only part of Suncor, and this move means there won’t be any PC engine oil anymore?
Or will HF just produce PC-labelled oil at another plant?
Petro-Canada just recently acquired Canadian Tires gasoline business; CT ‘GasPlus’ stations are slowly becoming PC gas stations, and they sell PC oils…can’t see that disappearing??

This is simply speculation, not anything concrete or conclusive. Just so called reading the tea leaf, right?

I read that article as HF is planning on spinning off their lubricants & specialty division completely. Whether it’s a new independent company, or whether it’s sold / separated out from their refining business somehow.

I could even imagine it could be similar to BP, where they maintain a stake in it. But new ownership runs the lubricants division. (See castrol.)

Or I could see something like Valvoline, where the branding is split. Aramco owns the part of the brand that makes oil and sells oil. Where Valvoline owns the VIOC division, still.

There’s a number of ways that it could work out. But I see it being a tough road ahead for petrocanada in the U.S. market. No idea about inside Canada where they have an extremely well known name. In the U.S., they are big in rail road engine oil and also, surprisingly food grade products. So I’m watching that business.

 

[addyguy]

Oh, okay, didn’t realize you were saying RIP the PC American business. Still an interesting development at this time!