Import of group II base oils
Import of base oils – The European Commission plans again next year to reduce an import duty exemption on Group II base oils from nations that do not have free trade agreements with the European Union.
The commission plans to reduce its quota on Group II imports for the first half of 2022 from its current level of 150,000 metric tons for six months, a spokesperson told the Lube Report, but has not yet set a new figure.
The quota has its greatest impact on US suppliers, the largest Group II source in the bloc without a free trade agreement.
Previously, the bloc retained 3.7% of the import tax on the first 200,000 tons of Group II imported every six months, but the quota was reduced to 150,000 in the first half of this year.
Lubricant Organizations Want More
Trade organizations such as the European Lubricant Industry Union and the companies they represent are lobbying for a higher quota and a longer transition phase, based on the view that demand for Group II base oil in Europe will recover as the coronavirus pandemic diminishes and economic activities increase.
This sentiment was echoed by Chevron, the largest US Group II supplier to the EU. “The European lubricant industry has benefited in recent years from consistent access to Group II imported base oils,” a Chevron spokeswoman said recently.
She added that while the industry tries to manage the commercial challenges of the global pandemic, it is imperative that European blenders can obtain stable and adequate supplies of Group II base oils.
The current quota of 150,000 tons, effective until December 31, applies to Group II oil types 150N, 220N and 600N. Some industry experts say the higher cost for Group II imports would disproportionately affect small and medium mixers.
The regulation was controversial when adopted in 2019, supported by ExxonMobil, which opened Europe’s first large Group II plant in Rotterdam, Netherlands, earlier that year. It was contested by importers and industry groups.
The reduction and eventual removal of the quota would mainly affect US imports. Other large Group II exporters, including Singapore, South Korea, Canada and Japan, have free trade agreements with the EU.
