Shell Deutschland GmbH has made a final investment decision to convert the hydrocracker of the Wesseling site at the Energy and Chemicals Park Rheinland into a production unit for Group III base oils, used in making high-quality lubricants such as engine and transmission oils. The move is part of Shell's strategy to create more value with fewer emissions, aligning with its target to become a net-zero emissions energy business by 2050.
The repurposing of the European refinery is a significant step towards serving the growing lubricant customer base with premium base oils. The high degree of electrification of the base oil plant, along with the ceasing of crude oil processing into fuels at the Wesseling site, is expected to reduce Shell’s scope 1 and 2 carbon emissions by around 620,000 tonnes a year. The new base oil plant is expected to start operations in the second half of this decade, with a production capacity of around 300,000 tonnes a year.
The investment, financed by Shell’s Chemicals and Products business, meets the minimum acceptable internal rate of return set out at the company's Capital Markets Day in 2023. Group III base oils are mineral base oils with very high viscosity, produced by hydrocracking technology. The market for high-quality engine and transmission oils, as well as e-fluids and cooling fluids, some of which are made from these base oils, is expected to grow.
Shell has already driven forward the transformation of the Energy and Chemicals Park Rheinland with investments in a 10-megawatt electrolyser to produce renewable hydrogen and a biomethane liquefaction plant. Despite ceasing crude oil processing at the Wesseling site, fuel supplies for the German market are expected to remain stable and secure.
The Energy and Chemicals Park Rheinland, located near Cologne, is comprised of two sites: Wesseling and Godorf. It currently has the capacity to process over 17 million tonnes of crude oil a year, of which 7.5 million tonnes are processed at the Wesseling site. The decision to end crude oil processing at the Wesseling site by 2025 does not affect the processing at the Godorf site.
In conclusion, Shell's investment in repurposing the Wesseling site at the Energy and Chemicals Park Rheinland demonstrates the company's commitment to sustainability and its efforts to align with its net-zero emissions target. The move also reflects the company's strategic focus on creating value with less emissions, while meeting the growing demand for high-quality lubricants in the European market.