Group III Base Stock Trends &

Performance

BASE OILS AND LUBRICANTS IN

RUSSIA AND THE CIS
Moscow, April 6th 2011

Jan Trocki
SK Lubricants Europe B.V.
Agenda

• SK in the global Group III market

• Group III growth drivers in Europe
• Group III base stock properties & benefits
• YUBASE approval status
• Conclusion

2
Global Base Oil Capacity by API Group

Naphthenic
Group III 9%
7%

Group II
24% Group I
60%

 Total Nameplate Capacity: 927,370 bpd

Global Group III : 62,439 bpd/ 3.1m mt
Source: Lubes& Greases World Base Stock Guide
3
Base Stock Categories

Category Viscosity Index Saturates (%) Sulphur (%)

Group I 80 to 120 <90 >0.03

Group II 80 to 120 ≥90 ≤0.03

Group III ≥120 ≥90 ≤0.03

Group IV Defined as PAOs

Group V All other base stocks: esters, PAG.......

Definitions according to:

API 1509: Engine Oil Licensing and Certification System, Appendix E
ATIEL Code of Practice, Appendix B

4
SK Lubricants
• A Division of SK Energy and part of SK Holdings
• Production in Ulsan, Korea and Dumai, Indonesia
• Global sales and distribution network

2014

5
Global Top 10 Group III Base Stock Manufacturers

2010
30000

25000

20000
bpd

15000

10000

5000

Global Group III Capacity: 62,430 bpd (3.1m tonnes)

Source: Lubes& Greases World Base Stock Guide
New plants: 66,500 bpd (3.3m tonnes)
6
Future of SK Base Oils

• World’s largest Group III base stock manufacturer

• New capacity announcements in 2010
• Maintains global leadership in global Group III supply

5th
4th
Revamp
+500k Mt
Dumai
+500k Mt
+ 250k Mt

2nd

1st

7
Global Top 10 Group III Base Stock Manufacturers

2015
50000
45000
40000
35000
30000
bpd

25000
20000
15000
10000
5000
0

8
Group III Entered Europe with Extended-ODIs

30,000km/
2 years
15,000km
1 year

10,000km
2 per year
5W-40 0W-30
0W-30
15W-40 10W-30 5W-30 5W-30
5W-30
10W-40 5W-40

1980s 1995 2010

9
In-Use Fleet Filled with 5W-XX

Source: ACEA

10
Growth of 0W-XX & 5W-XX in DIFM channels

SAE 0W-XX & 5W-XX SAE 10W-XX, 15W-XX & 20W-XX

11
Demand for Reduced Emissions

Source: ACEA

12
Improving Fleet Fuel Consumption

gCO2/km for gasoline & diesel cars

Source: ACEA

13
The Fuel Economy Challenge

Fines per g CO2 x unit

sales above target

2012
2020
130g
95g
CO2/km
CO2/km

Source: EU Statistics

14
Group III Base Stock Drives Lubricant Performance

Legislation Maintain
ODIs
HIGH PERFORMANCE

BASE STOCKS

Consumers Low volatility

Protect
Increasing FuelFuel
Economy/ Exhaust
Low temperature
After
Oil Stress economy
CO 2 Emissions
treatment
Higher VI
Commercial
Operators
Low sulphur

Oxidation stability
Biofuels Frictional properties
OEMs

15
SK Lubricants “YUBASE” Product Range

• Manufactured in Ulsan, Korea and Dumai, Indonesia

– New manufacturing in Asia (2013) and Europe (2014)
– SK patented manufacturing process
– SK signed ATIEL Base Stock Manufacturers Letter of Conformance
• SK Base Stock Slate includes:

– YUBASE 4 Group III

– YUBASE 6 Group III
– YUBASE 8 Group III
– YUBASE 4 plus Group III+
– YUBASE 6 plus Group III+
– YUBASE 3 Group II

• Applications
– High performance engine oils
– Transmission fluids
– High performance industrial products
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Key YUBASE Products

YUBASE 4 YUBASE 4 YUBASE 6

plus
API/ATIEL Base Stock Grou III III+ III
p
Kin Visc@100°C, cSt 4.23 4.17 6.45

Viscosity Index 124 134 131

CCS@-30°C, cP 1490 1190 4930

Noack volatility, %wt 14.5 12.8 6.9

Pour Point, °C -15 -18 -15

Sulphur, ppm 1 1 1

Paraffins + 1 ring paraffins, 80.5 93.1 81.5

vol %

17
Group III vs Group II

Group I Group I Group I Group I Group I Group I

I II II+ I II II+
Typical YUBAS YUBAS Typical YUBAS YUBAS
E4 E 4 plus E6 E 6 plus
KV@100°C, cSt 4.1 4.22 4.1 6.6 6.45 6.44
Viscosity Index 102 123 133 102 131 143
CCS @ -25°C, cP 1400 - - 5600 - 2020
CCS @ -30°C, cP 2650 1525 1138 - 4973 3738
Noack volatility, %wt 26 14.7 13.5 10.0 7.1 6.8
Sulphur, ppm <10 <1 <1 <10 <1 <1

18
Higher VI Stocks: Easier Pumpability

Low temperature properties in the mini-rotary viscometer.

- Base Stocks with 0.3 wt% pour point depressant added
cP
20,000

YUBASE 6 YUBASE 6 plus

16,000 YUBASE 4

12,000

YUBASE 4 plus
8,000

4,000

0
-25 -30 -35 -40

℃
19
ASTM D4684, TP-1, From: Sakkers and Cho, ICIS London 2008
Lower volatility and improved pumpability

SAE 5W-40 multigrade engine oil

% wt A B C
YUBASE 4 55.60 - 38.90
YUBASE 4 plus - 38.40 16.70
YUBASE 6 19.20 37.20 19.20
VII 12.60 11.80 12.60
DI Additives balance balance balance

Properties

Vis. @100℃, cSt 13.84 13.79 13.81 12.5~<16.3

CCS @-30℃, cP 5,600 5,570 5,180 Max. 6,600
MRV @-35℃, cP 35,500 32,540 30,610 Max. 60,000
Noack, wt% 11.1 9.5 9.7 Max. 13
HTHSV @ 150°C, cP 3.71 3.72 3.72 Min. 3.5

API SM/CF, ACEA A3/B3/B4/C3-04 PCDO 20

Traction Coefficient and Fuel Economy

0.045

0.04

0.035
Traction Coefficient@60°C

0.03

0.025

0.02

0.015

0.01

0.005

•YUBASE can offer advantage over Gp II

0
0 1000 2000 3000 4000 •Gp III choice for future Fuel Economy critical
Mean Speed, mm/s •YUBASE plus offers superior performance
Gp II YUBASE YUBASE plus

21
YUBASE Offers Fuel Economy

MB M111FE Test
2.5

2
% FEI vs RL191

1.5

0.5

YUBASE YUBASE plus MB229.51 limit

22
Group III Growing in Heavy Duty

2002 2008 2012

• Focus on CO2 emissions
80
– No EU legislation (yet)
• Euro VI will mandate use of D 70
PFs on all vehicles
– Low SAPs HDEOs required 60
• Shift from 15W-40 to 10W-XX 50
• 5W-XX growing fast driven by
OEMs % 40
– Clear fuel economy benefits
30
– Durability concerns can be easily
overcome
20
– Positive field data exists
– Market attitude obstacles are al 10
so becoming easier
0
20W-50 15W-40 10W-XX 5W-XX
Source: Lubrizol (ICIS February 2010)

23
Replace PAO Correction Fluid

SAE 5W-30 multigrade heavy duty diesel engine oil

A B C
PAO 6 30.00 10.0 -
YUBASE 4 39.30 - -
YUBASE 4 plus - 44.30 43.80
YUBASE 6 - 15.0 -
YUBASE 6 plus - - 25.50
Additives balance balance balance
Properties

Vis. @100℃, cSt 11.6 11.6 11.8 9.3~<12.5

CCS @-30℃, cP 6,150 6,050 5,900 Max. 6,600
Noack, wt% 11.6 11.8 11.3 Max. 12.0
HTHS @ 150°C, cP 3.54 3.56 3.60 Min. 3.5

ACEA E6-08 (13% max Noack), MB228.51 (12.0% max Noack)

24
YUBASE – PCMO Formulation Coverage

A5/B5-10, A3/B4, C1-10, C2-10, C3-10, C4-10

502, 505, 505.01, 501.01, 504, 507

229.3, 229.31, 229.5, 229.51

LL-01, LL-04

dexos 2

934-B, 913-C

RN0700, RN0710, RN0720

B712290

A40

SL, SM, SN, CF

25
YUBASE – HDEO Formulation Coverage

E4-08, E6-10, E7-10, E9-10

VDS-3, VDS-4, CNG

228.31, 228.5, 228.51

3277, 3275, 3477

LDF, LDF3

Extended Drain

RXD, RGD, RLD, RLD2

EO-M Plus, EO-O Premium

CI-4, CJ-4

Others Cat ECF-1-a, Deutz III-05, MTU Type 3 & 3.1,

CES 20076/77, 20072, 20081
26
Summary

 Group III capacity will grow dramatically to 2015 with SK at the

forefront, but technical requirements will continue to absorb new
capacity

 YUBASE and YUBASE plus enable higher performance standards in

Europe and will contribute to future CO2 reductions in PCMO

 Group III base stocks create technical performance opportunities in

next generation heavy duty lubricants

 YUBASE proven in meeting all major specification requirements

27
T H A N K Y O U

Jan Trocki
SK Lubricants Europe B. V.
[email protected]
+44 (0) 1285 750590