The Growing Demand For High Vis PAO Within Asia

The Growing Demand for HighVis PAO within AsiaTony QianCustomer Technical Service and MarketDevelopment ScientistINEOS Singapore

AGENDAThe Growing Demand for High Vis PAO Synthetics within AsiaPAO General informationHigh Vis PAO ApplicationsCompressor OilIndustrial Gear Oil & Wind Turbine OilIneos New PAO Project2

PAO General information3

General informationKline estimates that global finished lubricant demand at 40.5 million tons in 2018Source: Kline Webinar: Global Lubricant Basestocks Market Trends by Anuj Kumar at Oct 9, 2019

General informationKline estimates global base stock demand at 36.5 million tons in 2018;Synthetic and semi-synthetics represent 13% of this total.Source: Kline Webinar: Global Lubricant Basestocks Market Trends by Anuj Kumar at Oct 9, 2019

General informationSource: Kline Webinar: Global Lubricant Basestocks Market Trends by Anuj Kumar at Oct 9, 2019

General informationSynthetic Lube Market Edges Up- George GillLubes ‘N Greases MENA, February 2017The main PAO drivers are OEM technical demand, emission and fuel economyregulations, extended oil drain intervals, and so on.

General informationHi Vis PAO SegmentsHigh Vis PAOs represent a small partof the total PAO market, and it workas viscosity builders for finishedlubricants in the ISO 22 to ISO 460range.Before High Vis PAOs were onlyavailable in two viscosity grades, 40cSt and 100 cSt.However, with the new metallocenecatalyst technology, it is now feasibleto manufacture 1,000 cSt and above.The key market for High Vis PAOsis industrial lubricants.High Vis PAO Market SegmentsLubricants-IndustrialGear, Grease, Compressor-TransportationGear, Manual transmission-Wind TurbineGear, GreaseCable CompoundFiber optic compoundsOtherCosmetics, polymer modification

High Vis PAO ApplicationsAsian High Vis PAO Segmentation by ApplicationOther including Compressor oil, Railway Industrial Oils and so onAutomotive*2.7%Grease12.7%Other17.8%Industrial Gear66.8%Incld. Wind turbine*Automotive includes Continuous Variable Transmission Oils

General informationAdvanced mPAO 10 Base FluidMetallocene technology can be used to produce decene-based10 mm2/s PAOs with excellent low temperature performanceConventional PAO10Typical PropertiesNew MetalloceneDecene-based PAO 10K. Viscosity @ 100 C9.610.6K. Viscosity @ 40 C62.964.6K. Viscosity @ -40 C32,65021,870Viscosity Index132155Pour Point, C-45-63Noack Volatility3.53.3Flash Point, C250263

General informationConventional High Vis PAOs Inconsistent Backbone StructureConventional PAOR1-CH CH2 R2-CH CH2Alpha olefinIn-situAlX3A) Polymerization Poor Cold Cranking Viscosity Poor Brookfield Viscosity Poor Pour Point PropertiesB) Hydrogenation

General informationMetallocene PAOR-CH CH2Alpha olefinMA) PolymerizationB) Hydrogenation[]R-CH- -CH2-CH- x-HCH3RHydrogenated oligomers Consistent Backbone No Mis-insertion Defects Excellent Thickening Power Superior Low Temp Prop. Shear StableAdapted from “Synthetic Base Stocks”, mne.psu.edu/Chang

Wind TurbineConveyorMetalOn CarHigh Vis PAO ApplicationsWhere & Why are synthetic High VisPAO used Higher load/PressureLonger shelf lifeBetter demulsificationBetter anti-oxidant performanceBetter lower temperature fluidityBetter high temperature lubricationPremiumMiningCement

High Vis PAO ApplicationsMining IndustryHeavy . Hot . Cold. . Dust. . Rain. . Snow . Less maintenance Long shelf life

Compressor Oil As a general rule, mineral-basedcompressor lubricants require oilchanges after 500-1,000 hours ofservice, while syntheticlubricants can be used incontinuous operation in excessof 8,000 – 10,000 hours ofservice

Compressor OilOil 1 : Mineral basedOil 2 : Ester basedCompressor Life140Oil 3 : Part SyntheticOil 4 : High Vis PAO213414012012010010080806060discharge 105-110 Cpressure 7 bar40204020002505007501000125015001750Hours of OperationSource: International Lubricants Week Moscow 11 – 14 Nov 2014200022502500275003000

Compressor OilSynthetic Compressor Oils10,000-Hour Cost Comparison of PAO vs Mineral RotaryScrew Compressor LubricantsOPERATIONS \ OIL TYPEInitial Fill (gal)Fluid or Oil Makeup (gal)Mineral Oil Changes (9), (gal)PAO Fluid Changes (0), (gal)Total (gal)Cost per (gal), Total Cost of Lubricant. Replacement FiltersCost of (1) Replacement FilterTotal Filter Cost, Oil Change Labor CostTOTAL COSTSavings from PAO Fluid, % Savings with PAO FluidAdvantages of PAO Synthetic Compressor Oils1) Longer oil life (8,000 – 10,000 hours)2) Low rates of deposit formation3) Wide operating temperature range4) Improved chemical resistance5) Excellent Viscosity Index properties6) Higher flash and fire point (higher auto-ignition tempPAO-Based Fluid6015----75 20/gal1,500.002 30.00 60.00 40.00 3,200.00 3,20050%Mineral Oil6085540--625 4/gal2,500.0010 30.00 300.00 400.00 6,400.00-----

Compressor OilSavings Improve overall efficiency Increased stability @ low/high temperature Decreased operating temperature Decreased foaming tendency Decreased lubricant consumption Better wear control Decreased working hours on equipment Decreased global maintenance costs Improved reliabilitySource: International Lubricants Week Moscow 11 – 14 Nov 2014

Compressor OilCompressor Oil Market TrendsA&P is projected to be the largestmarket due to: High growth of themanufacturing industries High growth of theconstruction industries High demand from thecountries such China andIndia.Source: Markets and Markets, Compressor oil market by base oil-Global Forecast 2016 to 2023

Industrial Gear OilApplications include, but not limited to: Heavily loaded gearboxes in steel mills Conveyor drives Cooling tower fandrives Hoist gear boxes Paper mill geardrives Power plant geardrives Rubber mill gearreducers Chemical plantreactor gear drives Cold ambientoutdoor gear drives Wire forming geardrives

Industrial Gear OilTypical Industrial Gear Oil FormulationsBase Oil ABase Oil BCompatibilizerAdditivesKV40 (cSt)KV100 (cSt)Viscosity IndexPour Point, CBrookfield -26 C(mPa s)ISO VG 220ISO VG 320PAOFormulationPAOFormulationPAO40 70%PAO8 10%Ester -20%Ester 10-20%2-5%321.034.8153-4272,000Source: ndustrial-gear-oil/

Industrial Gear OilGear fluid formulations categorized by application: Enclosed OpenGear oils fluids find application across a wide range ofindustrial end-use sectors. These include:AutomotiveMachinery ManufacturingElectrical/Power GenPrimary MetalsMiningFabricated metalsOil & GasTextileChemicalsOthers%Gear in Market97816EnclosedEnclosedEnclosedEnclosed / Open16743921Enclosed / 18 Estimate:Mineral 800 KTSynthetic 110 KTMain TypeSOURCE: KLINE 2015Source: Kline 2011

Industrial Gear OilIndustrial Gear Oil Future Challenges Smaller gearbox size Higher efficiency and higher temperatureSmaller oil tankMore cost concern Longer oil drain intervalBetter filtration requirementCondition monitoringGearbox supplier trend More China gearbox suppliersIndustry integration (ZF and Bosch Rexroth)

Wind Turbine

Wind Turbine OilTypical PAO Containing ISO 320 WindTurbine OilPAO 10065PAO 825Ester10Additive PackageNot specifiedKinematic Viscosity @ 40 C318.3Kinematic Viscosity @ 100 C35.91Kinematic Viscosity @ -10 C10,947Viscosity IndexPour PointBrookfield Viscosity @-26 CKRL Shear Stability 100 HrFZG 192 HRSource: Michael Mϋller, Evonik Industries analysisThe Top 10 Global Onshore WindTurbine Makers of 2018160-48 C64,0000.7%1.5Source: BloombergNEF (BNEF)

Wind Turbine OilPAOs Save Money in Wind TurbinesTypical 1.5 MW Wind turbine operating 7,000 hrs/yr for 20 years;Oil Volume 400L (Larger turbines require more oil)MineralOil Change Interval14,000 hrOil changes in 20 years9Oil Consumed3,600 LTotal Oil Cost14,000 Power Loss CostOil Change Cost (300 /per)Total (with Oil Cost)Relative SavingsPAO28,000 hr41,600 L13,600 4 /L8.5 /L189,000 2,700 170,000 1,200 206,100 ---184,900 -21,200 Source: Wilfred Bartz, www.swisstribology.ch/documents/bartz.pdf

Wind Turbine OilWind Turbine Capacity TrendsChina accounted for 45% of global growth and its consumption has increased 20-fold in the last10 years. Wind has accounted for around 50% of renewables generation in the last few years.

Wind Turbine Oil

Wind Turbine Oil

Wind Turbine OilWind Turbine Oil Future TrendsIn 2015, between 35 and 40 KT of various lubricants wereused in wind turbines. Gear lubricants accounted for 70%of the total and those contained about 65% HiVis PAO.Therefore the estimated HiVis PAO requirement in WindTurbine was 15.9 to 18.2 KT in 2015.The 2020 Wind Turbine lubricant demand is estimated to bebetween 51and 65 KT, requiring about 23.2 to 42.2 KT of HiVisPAO.2015HiVis PAOat 65%GEARat 70%PAOat Rat 70%PAOat 80%HiVis PAOat 0Source: “Positive outlook for wind turbine lubricants”, Sushmita Dutta, Kline Consulting as reported inTribology & Lubrication technology, February 2017

Wind Turbine OilFuture Challenge-WT Gearbox Lubrication ChallengesIndustry/ OEM ChallengeImpact to LubricantKey Lubricant FormulationParameterPAO AdvantageWeight restrictions on gear box: compact design, smaller gear box size Creates environment high load handling capability;susceptible to micro-pitting case hardening of gearsand wearMicro pitting protection: Gear and Better lubrication andbearing protectionlower friction factorDemand for extended oil drain intervals: Demands oil performanceup to 7 yearsretention over timeUse of fine filtrationWet oil filterabilityOxidative stability/Viscos Foam andair releaseBetter oxidative stabilityFilterabilityOff-shore wind turbinesCreates environment for watercontamination; bioFilterability/Water tolerance/Rustdegradeabilityand corrosion protectionBetterdemulsification/foamingand biodegradeabilityChanging ambient temperatures andnon-permanent operationRequires stable operation oflubricant: wide ambienttemperature rangeLower pour point andHigh Vis indexSource: ExxonMobile Wind Turbine Gear Lubricant 2015Viscos/Low Temperatureperformance

Ineos New PAO ProjectINEOS PRESS RELEASE03 June 2019This June, INEOS Group announced an agreement to build its first everpetrochemicals complex in the Middle East. The complex will be built inJubail, Kingdom of Saudi Arabia (KSA) and include world scale plants for:Linear Alpha Olefin (LAO) and Polyalphaolefin (PAO). This complex will belocated adjacent to a new world-scale cracker, to be constructed by SaudiARAMCO and TOTAL, which will supply olefin feedstock to the INEOS units.

PAO 100 65 PAO 8 25 Ester 10 Additive Package Not specified Kinematic Viscosity @ 40 C 318.3 Kinematic Viscosity @ 100 C 35.91 Kinematic Viscosity @ -10 C 10,947 Viscosity Index 160 Pour Point-48 C Brookfield Viscosity @-26 C 64,000 KRL Shear Stability 100 Hr 0.7% FZG 192 HR 1.5 Typical PAO Containing ISO 320 Wind Turbine Oil