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REDUCED CRUDE OILTO LUBE REFINERY

FUEL REFINERY PROCESS

CRUDE OIL

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LPG

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NM

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ASP

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BITUMEN

150 SS500 SS

1300 SS

75 SS/ SPINDLE

RPO(AROMATICEXTRACTS)

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BRIGHT STOCK

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150 BS

1300 N

500 N

150 N

75 SM

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LUBE REFINING

BASE OIL TERMINOLOGY

• LUBES ARE HIGH VALUE PRODUCTS WITH BROAD VARIETY OF USES– Automotive: Engine oils, Automatic Transmission Fluids (ATF)– Industrial: Turbine oils, Hydraulic oils, Industrial Gear oils, Compressor oils, Refrigeration oils, Machine oils, Electrical oils, Drilling Fluids etc

– Medicinal: Food Grade oils, White oils,..

• REFINERIES PRODUCE BASE OILS OR BASE STOCKS– Finished Products are Blends of Base stock with(out) Additives

• BASE STOCKS ARE CALLED BY VARIOUS NAMES:– Neutrals (100N, 150N, 600N,...) Bright Stocks– Grades (SAE 5, 10, 30, ..; ISO 22, 32,...)

• MOST COMMON LUBE NAME IS NEUTRAL– Number is the Viscosity @ 40 or 100oC

• BRIGHT STOCK IS HEAVY LUBE PRODUCED FROM RESIDUE– Name Refers to Appearance and Typical Viscosity is 2,500 SSU @ 100oF

• GRADE NAMES MAY REFER TO VISCOSITY OR TO TRADEMARKS

BASESTOCK PROPERTIES AND DEFINITIONS

• BASE STOCK COMPOSITION DETERMINES PERFORMANCE OF FINISHED PRODUCTS

– Viscosity Index or VI• Higher VI improves Volatility, Fuel Economy, and Operating Range

– Saturate Content• Higher Saturates improves Oxidation Stability and Soot Handling

– Wax Content• Lower Wax Improves Operating Range• Lower Wax improves Low Temperature Performance

– Pour Point– Cloud Point

• AMERICAN PETROLEUM INSTITUTE (API) BASESTOCK CATEGORIES

API Group Sats Sulfur VI TYPICAL MFG PROCESS I <90% >0.03% 80-119 Solvent Processing II >90% <0.03% 80-119 HYDROPROCESSING III >90% <0.03% 120+ WAX ISOME, H/C, GTL IV N.A. N.A POLYALPHAOLEFINS

(PAO) V ALL OTHER BASE STOCKS

KEY LUBE OIL PROPERTIES

• VISCOSITY (MEASURE OF FLUIDITY)– Range from ~ 4 to 20 cSt @ 100oC for Neutrals up to 32 cSt for Bright Stock– Brookfield Measures Low Temperature Fluidity on Finished Oils @ -40oC

• VISCOSITY INDEX (INVERSE MEASURE OF CHANGE OF VISCOSITY WITH • TEMPERATURE)

– Ranges from ~85 to ~105 for most Base stocks, Higher for Speciality Grades– (ex: Exxsyn ~140, PAO ~150, XHVI~140+, Ultra S ~ 125)

• POUR POINT (TEMPERATURE AT WHICH FLUID BECOMES NEARLY SOLID)– Typically from -9 to -24oC– Cloud Point is Temperature at Which Wax Crystals Appear

• VOLATILITY (MEASURE OF OIL LOSS DUE TO EVAPORATION)– Noack Volatility Measures Actual Evaporation (Typically 20-35 wt%)– GCD Volatility Measures Front End of Boiling Curve (e.g 10% @375oC)

• COLOR (APPEARANCE) AND STABILITY (MEASURE OF COLOR CHANGE IN LIGHT)

• CONRADSON Carbon (MEASURE OF CARBON RESIDUE LEFT ON IGNITION)

• SATURATES, AROMATICS and ASPHALTENE CONTENTS

CLASSIFICATION OF LUBRICANTS

GENERAL CATEGORIES

SPECIFIC APPLICATIONS

PHYSICAL SPECIFICATIONS

STANDARD SPECIFICATIONS

PERFORMANCE REQUIREMENTS

USERs SPECIFICATIONS

TYPE OF BASE OIL

INDIAN LUBE REFINING CAPACITY

» TMTPA

• HPCL, Mumbai - 330

• IOC,Haldia - 200

• CPCL, Chennai - 240

• BPC, Mumbai - 180

• TOTAL - 950

LUBE MANUFACTURING

Lube Refinery

Blending Plants

Function

Base Oils

Viscosity IndexPour PointFlash Point

Lubricants

ImprovedImprovedNo change

Oxidation Stability

Additives

Key Properties

CUSTOMERS

Special Properties

BLENDING CAPACITIES

BLENDING PLANT CAPACITY (TMTPA)

MAZAGAON 180

SILVASSA 60

B’ BUDGE / RAMANAGAR

30

CHENNAI 30

SEWREE 10

TOTAL 310

GENERAL CATEGORIESAUTOMOTIVE LUBRICANTS

INDUSTRIAL LUBRICANTS

GREASES SPECIALTIES

ENGINE OILS

TRANSMISSION

OILS

TURBINE OILS

HYDRAULIC OILS

COMPRESSOR OILS

REFRIGERATION OILS

SPINDLE OILS

CYLINDER OILS

GEAR OILS

TEXTILE OILS etc

WHEEL BEARING

CHASSIS

INDUSTRIAL

CUTTING FLUIDS

METAL ROLLING OILS

RUBBER PROCESS OILS

RUST PREVENTIVES

HEAT TRANFER FLUIDS

METAL DRAWING COMPOUNDS

QUENCHING OILS etc

FUNCTIONS OF ENGINE OILS

o PERMIT EASIER STARTING

o LUBRICATE AND PREVENT WEAR

o REDUCE FRICTION

o PROTECT AGAINST RUST AND CORROSION

o KEEP ENGINE INTERIORS CLEAN

o COOL ENGINE PARTS

o SEAL COMBUSTION PRODUCTS

o BE NON-FOAMING

o AID FUEL ECONOMY

GREASES COMPOSITION

BASE OIL + THICKENER + ADDITIVES

MINERAL SOAP ANTI-OXIDANT

SYNTHETIC NON-SOAP ANTI-CORROSION

VEGETABLE EP/ANTI-WEAR

TACKINESS AGENT SOLID FILLER

WHY USE A GREASE?

• A GREASE OFFERS UNIQUE CHARACTERISTICS WHICH MAKES IT PARTICULARLY USEFUL IN MACHINE ELEMENTS

STAY WHERE IT IS PUT ALLOWS UNATTENDED SERVICE FOR LONG PERIODS (SEALED FOR LIFE) REQUIRES LESS FREQUENT APPLICATION FOR

AREAS OF POOR ACCESSIBILITY SEALS OUT CONTAMINANTS OPERATE OVER A WIDE TEMPERATURE RANGE SOLID ADDITIVES CAN BE USED WITHOUT CONCERN OF SETTLING OUT LOW LEAKAGE MEANS THEY ARE EFFECTIVE IN

WARM EQUIPMENT

NLGI CLASSIFICATION OF GREASES

NATIONAL LUBRICRATING GREASE INSTITUTE

NLGI NO. ASTM PENETRATION @ 25OC*1 310-3402 265-2953 220-2504 175-2055 130-2606 85-115

* After working 60 strokes.

MAJOR INDUSTRIAL GRADES• ENKLOS• TURBINOLS• PARTHANS• SEETUL• SPINTEK

• KOOLKUTS• RUSTOPS• HYTHERMS• ELASTOS• METAQUENCH

MARKET SHARE (PSUs)(2005-06)

• MARKET LEADER IN GROWTH : 35.1% AGAINST INDUSTRY GROWTH OF 12.7%

HPC Figures exclude base oil sales to BPC / IOC

CO. CURR (TMT)

HIST (TMT)

% VAR

% MARKT SHARE (CURR)

% MARKT SHARE (HIST)

HPC 291.8 216.0 35.1 33.3 27.7

BPC 113.7 115.4 (1.5) 12.9 14.8

IOC 454.2 421.0 7.9 51.8 54.1

IND 877.6 778.8 12.7 100.00 100.00

SECTORIAL CONTRIBUTION

LUBES MARKET1250 TMTPA

INDUSTRIAL450 TMT

AUTOMOTIVE800 TMT

RET OUTLET170 TMT

BAZAAR580 TMT

DIRECT500 TMT

2S 2/3W 150 TMT

GEAR OIL100 TMT

CAR 30 TMT

D E OILS350 TMT

4S 2W45 TMT

OTHERS75 TMT

Growing

CORE SECTORS• Sector Percentage• Auto OEM - 7• Cement - 3• Power - 4• STU - 8• Rubber -9• Colliery -4• Defence - 4• Railways -10• Metals - 10• Others -41

LUBE MARKET : MARKETING CHANNELS

RETAIL OUTLETSAUTOMOTIVE OILS AND GREASES

RESELLERS/JOBBERSAUTOMOTIVE OILS AND GREASES

C&F AGENTSFOR SMALL AND MEDIUM INDUSTRIES

LUBE DISTRIBUTORSFOR BAZAAR TRADE

DIRECT SALES TO CONSUMERS

DEVELOPMENT OF NEW CHANNEL BAZAAR : LUBE DISTRIBUTORS

• BAZAAR : 40% VOLUMES : CASTROL AND OTHER PLAYERS

• PSUs TOO STARTED DEVP.

• BAZAAR REMAINED UNCATERED

• NEED FOR EXCLUSIVE LUBE DISTRIBUTOR CHANNEL

• SHIFT IN BUYING HABITS OF CUSTOMERS : NEW GENERATION VEHICLES : MECHANICS ACTING AS INFLUENCERS

• CHANNEL PICKED UP 25,000 KL WITHIN THREE YEARS

LUBE DISTRIBUTOR

• EXCLUSIVELY CATERING TO LUBE SHOPS, GARAGES, AUTHO. SERVICE CENTRES

• INFRASTRUCTURE : DELIVERY VEHICLE, STAFF, SHOWROOM / OFFICE AND GODOWN

• COMPUTER• FMCG TYPE OF MARKETING : POPs,

INVENTORIES, ORDER TAKING, SUPPLIES AND CREDIT / COLLECTIONS

DIRECT SALES - LUBES

• OEMs, CORE SECTOR ( STEEL. COAL, POWER, CEMENT, SUGAR ETC.,), RAILWAYS, DEFENCE ETC.,

• MOSTLY TENDER BASED EXCEPT LOCALISED SMALL REQUIREMENTS

• SALES SUPPORTED BY TECHNICAL SERVICES – CES, PES, CONDITION MONITORING, TRAILS, ENERGY AUDITS ETC.,

• PRICE HEDGING – SUPPORT TO CUSTOMER THROUGH FIXED PRICE : INVENORY MANAGEMENT : COST SAVINGS

LUBE NETWORK RETAIL AND DIRECT

• RETAIL OUTLETS : 5,000 PLUS : DIRECTLY CATERING TO END USER / CUSTOMERS AND MECHANICS

• LUBE DISTRIBUTORS : 150 PLUS : HAVING A BASE OF 80-100 BAZAAR SHOPS PER D’TOR WHO IN TURN SERVICE THE END USERS / MECHANICS

• LUBE CFAs, COLD, COD AND LUBE AND OTHER DEPOTS

RETAIL LUBES MARKETING

• Packaging• Lube Incentive Schemes• Advertising and Product Promotion

Campaigns • Launching of new Brands• Genuine oil tie-ups• Network Development• Micro Marketing • Mechanic Contact Program

ENVIRONMENT

• Long-term growth estimated at 3-4% p.a.

• More than 25 players of repute in the Market

• Over 500 small local blenders