1. Higher VI Group III Base Oils in the Merchant Market
Lubricants Symposium 2008
1st ~2nd October, KOLON Hotel, KyungJoo
Higher VI Group III Base Oils in the Merchant Market
Y.R. Cho, H.S. Song, S.A. Hwang, C.W. Park
Asia’s Leading Energy and Petrochemical Company

2. Contents High Quality Base Oil and the Global Demand
Market Forces and Key Drivers for Increased Use
of High Quality Base Oils
SK’s Base Oil Production
No.3 LBO Plant and YUBASE plus
Is YUBASE plus the Same Slate ?
Summary
High Quality Base Oil and the Global Demand 2

3. Group I Group II Group III Group IV Group V
High Quality Base Oil and the Global Demand
Group I
80 < VI < 120 % Sat < 90% % S > 0.03
Group II
80 < VI < 120 % Sat > 90% % S < 0.03
Group III
VI > 120 % Sat > 90% % S < 0.03
Group IV
PAOs
PIOs
Group V
Esters etc.
Iso-Paraffins
1& 2-R Aromatics
Naphthenes
Polar Compounds
iso-/n-Paraffins
Naphthenes
Iso-/n-Paraffins
High Quality Base Oils
Low Volatility
Excellent Thermal & Oxidation Stability
Excellent Low Temperature Fluidity
Good Friction Behavior and Wear Reduction 3

4. High Quality Base Oil and the Global Demand
10%~
25,000
20,000
15,000
10,000
5,000
30,000
[KMT]
7~8%
Group III
Group II
Group I 4% 2%
2000
2005
2010
2015
Source : SK Energy 4

5. Lubricant Manufacturers
Market Forces and Key Drivers for Increased Use of HQBO
Legislation
Emissions
Fuel Economy
Environmentally Friendly
Consumers
Extended Oil Drain Intervals
Fuel Economy
Maintenance
Global Economy
Economy Growth
Vehicle Changes
Engine Durability/ Cleanliness
Higher Operation Temp.
New Specifications
OEMs
Formulation
Product Differentiation
Cost
Lubricant Manufacturers 5 5

6. - Passenger Car Diesel - ILSAC : Phosphorus Content Limit
Market Forces and Key Drivers for Increased Use of HQBO
Euro 3
Euro 4
Euro 5
US Tier 2 bin 5
NOx (g/km)
PM(g/km)
Emissions Standards
- Passenger Car Diesel -
Legislation
Set Emission Target
Reduce PM/NOx/SAPS
Increase Fuel Economy
ILSAC : Phosphorus Content Limit
GF-1:
0.12 max
1990
1995
2000
2005
P (wt%)
0.12
0.10
0.08
0.06
0.04
GF-2:
0.10 max
GF-3:
GF-4
0.08 max
OEMs 6 6 6

7. Seq.VIB F/E improvement ILSAC : F/E Requirement
Market Forces and Key Drivers for Increased Use of HQBO
Seq.VI F/E improvement
%(vs.20W30)
Seq.VIB F/E improvement
%(vs.5W-30)
Legislation
ILSAC : F/E Requirement 3 5 2
Set Emission Target
Reduce PM/NOx/SAPS
Increase Fuel Economy 4 1
GF-4 3
GF-3
GF-2 2
GF-1
5W-20 & 0W-20
5W-30 & 0W-30
10W-30 1 SG
1990
1995
2000
2005
Source: Lubrizol
OEMs
Newly Designed Engines
Severer Operating Condition
After-treatment Devices
Lubricant
Manufacturers 7 7

8. Longer Drain Intervals
Market Forces and Key Drivers for Increased Use of HQBO
Consumer
Mono Grade
20W-XX
Longer Drain Intervals
Better Fuel Economy
Price Efficiency
15W-XX
Better FUEL ECONOMY
10W-XX
5W-XX
Lubricant
Manufacturers
0W-XX 8 8

9. High Quality Base Oils Lubricant
Market Forces and Key Drivers for Increased Use of HQBO
High Quality Base Oils
Formulation
Cost Efficiency
‘Synthetic’ Claims
Product Differentiation
Operational Conveniences
Lubricant
Manufacturers 9 9

10. Refining Technology Trends in Base Oil Production
SK’s Base Oil Production
Refining Technology Trends in Base Oil Production
Chemical Type Structure VI Pour Oxidation Toxicity
Very High
~175
Solid
@50°C
Excellent
Low
n-Paraffin (Wax)
iso-Paraffins with Branched chains
iso-Paraffins with highly branched chains (PAO's)
cyclo-Paraffin-single ring with long chains
Naphthenes, polycondensed
Monoaromatics, long chains
Polyaromatics
High
~150
Good
Excellent
Low
Good
~130
Good
Excellent
Low
Good
~130
Good
Good
Low
Poor
~60
Good
Medium
Low
Poor
~60
Good
Medium
Medium
Very Poor
<0
Good
Very Poor
Very High 10 10 10

11. Production of High Quality Base Oils using Fuels Hydrocracker Residues
SK’s Base Oil Production
Production of High Quality Base Oils using Fuels Hydrocracker Residues
The most cost effective option for producing high quality base oils
Provide the best overall performance in lubricant products
Classified as API Group III base oil
Limited to getting higher VI Group III base oils at practical yield in existing Hydro-cracking routes 11 11

12. SK’s Base Oil Production
1st
2nd
3rd
Production
Capacity
: 28.5K BD
1995
2001
2004
2006
2008
World Largest Group III Base Oil Manufacturer
Hydro-Cracked / CDW / All Hydro Processing Route
Total Production Capacity is about 1.35 MTPA 12

13. No.3 LBO Plant No.3 LBO Plant and YUBASE plus
Dumai ▶
Ulsan
JV with PT. PERTAMINA in Dumai of Sumatra Island, Indonesia
Higher VI Group III base oils from fuels hydrocracker residues
The First Higher VI Group III Base Oils in the Merchant Market
Annual Production : ~ 350k Mton
2 Years Project M/C : ~ 50 days earlier than schedule C/O : ~ 2 months earlier than schedule 13 13

14. No.3 LBO Plant and YUBASE plus
Physical - Chemical Properties of YUBASE plus (Commercial Product)
YU-4 plus YU YU-6 plus YU-6
cSt
17.6
19.5
33.0
36.9
cSt
4.07
4.22
6.34
6.48
Viscosity Index
134
122
145
130
Pour Point, ℃
-18
-15
-12 cP -
2080
2920 cP
1130
1590
3820
5200
Noack (A), wt%
14.0
15.2
5.8
7.5 14

15. Comparison of CCS and volatility, 4cSt
No.3 LBO Plant and YUBASE plus
Physical - Chemical Properties of YUBASE plus (Commercial Product)
Comparison of CCS and volatility, 4cSt
[CCS cP]
1000
1100
1200
1300
1400
1500
1600
1700
1800
[Noack Volatility (A method), wt%] 10 11 12 13 14 15 16 17 18
PAO
GTL
YUBASE plus
Group Ⅲ d
Group Ⅲ c
Group Ⅲ b
Group Ⅲ a

16. No.3 LBO Plant and YUBASE plus
Blending Study w/YUBASE plus – SAE 0W-20, API SM/ILSAC GF-4 PCMO
Formula [wt%] A B C D E
YUBASE 4
YUBASE 4 plus
100N (Group II)
PAO-4
YUBASE 6
VII
Additives
82.75 -
7.00
balance
72.75 -
10.00
7.00
balance -
82.75
7.00
balance -
63.75
20.00
6.00
balance -
63.75
20.00
7.00
balance
Properties
cSt
cSt
Viscosity Index cP
Noack (A), wt%
HTHS Viscosity, cP
43.5
8.41
173
6,250
14.4 -
43.0
8.33
174
5,760
13.2
2.63
40.9
8.21
181
4,560
12.3 -
43.5
8.38
173
5,830
11.5
2.69
43.4
8.40
173
5,390
14.6
2.68
< 6200
< 15.0
> 2.60 16

17. Highly Paraffinic Base Oils are Beneficial in Overall Performance ?
No.3 LBO Plant and YUBASE plus
Highly Paraffinic Base Oils are Beneficial in Overall Performance ?
Low Temperature, Low Shear Performance
Solubility and Seal Compatibility
Fuel Economy in Multi-Grade Engine Oils 17

18. No.3 LBO Plant and YUBASE plus
Low Temperature Low Shear Performance
- MRV Results (Nase Oils with 0.3wt% PPD)
[cP]
20,000
16,000
12,000
8,000
4,000
-25
-30
-35
-40
[℃] 18

19. YUBASE 4 plus based 5W-40 PCDO
No.3 LBO Plant and YUBASE plus
Seal Compatibility in 5W-40 PCDO
YUBASE 4 plus based 5W-40 PCDO
Seal Type
Results
Limits
■ NBR 34, Nitrile Butadiene
- Hardness change, point -1
-8/+2
- Tensile strength, %
-8.8
-20 max.
- Elongation at break, %
-33
-35 max.
- Volume change, %
0.4
0/+10
■ AK 6, Viton
± 5
-20
-50 max.
-23
-55 max.
0.2
0/+5
■ ACM E7503, Acrylate
pass
■ EAM D , Vamac
■ CEC L-39-T-96, Silicone (RE3-04) 19

20. No.3 LBO Plant and YUBASE plus
Friction Property, HFRR Charts in 5W-40 PCDO
YU-4
Step1
Step2
Step3
Step4
Step5
Step6
Friction
0.123
0.126
0.128
0.148
0.155
0.158
Film, μ
77.7
50.6
28.3
17.3
19.1
18.5
Temp. 40 60 80
100
120
140
YU-4 +
Step1
Step2
Step3
Step4
Step5
Step6
Friction
0.119
0.112
0.120
0.146
0.148
0.152
Film, μ
73.4
77.6
34.7
22.4
18.8
17.8
Temp. 40 60 80
100
120
140
In essence, both oils performed similarly, including the wear scar average
YUBASE plus based oil sample shows marginally thicker oil film and lower friction coefficient 20

21. Is YUBASE plus the same slate ?
Definition of Base Stock and Slate by API 1509 Appendix E
E A base stock is a lubricant component that is produced by a
single manufacturer to the same specifications (independent of feed
source or manufacturer’s location); that meets the same
manufacturer’s specification; and that is identified by a unique
formula, product identification number or both. ……..
E A base stock slate is a product line of base stocks that have
different viscosities but are in the same base stock grouping and
from the same manufacturer
E A base oil is the base stock or blend of base stocks used
in an API-licensed oil 21

22. Is YUBASE plus the same slate ?
Definition of Base Stock Slate by ATIEL CoP
A base stock slate is a product line of base stocks that:
are produced by the same manufacturer
meet the ATIEL definition of base stock
are in the same ATIEL Base Stock Group
may have different specified viscosities and other properties
have been demonstrated, in lubricants for which compliance with ACEA Oil Sequence is claimed, to be technically substitutable by other appropriate base stocks on the same slate
A manufacturer may have more than one base stock slate 22

23. Is YUBASE plus the same slate ?
YUBASE plus is the same slate
SK’s base stock slate, Group III slate:
- YUBASE 4
- YUBASE 4 plus
- YUBASE 6
- YUBASE 6 plus
- YUBASE 8
SK’s base stock slate, Group II slate:
- YUBASE 2
- YUBASE 3
- YUBASE L3
YUBASE plus is the same slate, but DIFFERENT BASE STOCK ! 23

24. Is YUBASE plus the same slate ?
Base Oil Interchange Guideline for API SM/ILSAC GF-4
From/To
GP I
GP II
GP III
GP IV
≤30%d, VIB >30% and ≤50%d All except IVAc, VG, VIII >50%d, All except IVAcj, VGj VIII
≤30%d, VIB >30% and ≤50%d All except IVAc, VG, VIII >50%d, All except IVAcj, VGj, VIII
All except
VIBh,i, IVAc, VIII
IVAcj , VGj, VIIIj, VIBh,i,j,k
≤30%d, IVAc, VG, VIB >30%d, All
BRT (O, all) IIIG (O, all) IVA (X,c) VG (X) VIB (O, k) VIII (X)
c Test not required provided the new candidate oil’s base oil blend viscosity at 100°C is greater than or equal to
the base oil viscosity of the original candidate oil, within the precision of the test.
d Represents mass percentage of the PCMO formulation.
h Test not required provided the CCS viscosity of the new candidate oil is less than or equal to the CCS
viscosity of the original candidate oil, within the precision of the test.
I Test not required provided the HTHS viscosity of the new candidate oil is less than or equal to the HTHS viscosity of the original candidate oil, within the precision of the test.
j Data set used to establish the BOI guidelines is based on a b/o VI range up to 126 VI, within the precision of the test
k VI of the base oil blend must be less than or equal to the VI of the base oil blend of the original candidate oil,
within the precision of the test. 24

25. Is YUBASE plus the same slate ?
Sequence IIIG Test Results in API SM/GF-4
Formula [wt%] A B C
YUBASE 4
65.86 -
YUBASE 4 plus
46.31
YUBASE 6
15.09
36.38
VII
9.25
7.50
Additives
balance
Physical Characteristics
cSt
10.84
10.33
10.01 cP
4820
3310
4090 cP
9290
6050
8010
Seq. IIIG Results
Viscosity
76.4
50.8
47.3
150 max
Average Cam+Lifter wear
32.4
22.2
32.6
60 max
Weight Piston Deposits
3.24 (*)
4.01
3.77
3.5 min
Oil Consumption
3.21
2.91
2.81
4.65 max
(*) Formulation A was passed in original program. But showed different result in this study due to different severity between testing laboratories and testing time, 25

26. Is YUBASE plus the same slate ?
Sequence VIB Test Results in API SM/GF-4
Formula [wt%] A B C
YUBASE4
65.86 -
YUBASE 4 plus
60.65
YUBASE 6
14.51
20.21
VII
9.25
8.75
Additives
Balance
Physical Characteristics
cSt
10.73
10.01
9.93 cP
4750
3120
3410 cP
9230
5810
6457
Seq.VIB Results
FEI 1, %
1.7 (*)
2.0
1.8 min
FEI 2, %
1.2 (*)
1.3
1.5
1.5 min
(*) Formulation A was passed in original program. But showed different result in this study due to different severity between testing laboratories and testing time, 26

27. Is YUBASE plus the same slate ?
Ball Rust Test Result in API SM/GF-4
Formula [wt%] A(5W-30) B (0W-30) C (5W-30)
YUBASE4
65.86 -
YUBASE 4 plus
60.65
YUBASE 6
14.51
20.21
VII
9.25
8.75
Additives
Balance
Physical Characteristics
cSt
10.73
10.01
9.93 cP
4750
3120
3410 cP
9230
5810
6457
BRT Results
Avg. Gray Value
131
126
137
100 min 27

28. Is YUBASE plus the same slate ?
Demonstration Test Plan for ACEA Oil Sequence
Test Items
ACEA A3/B3/B4/C3
ACEA A5/B5
SAE 5W-30
SAE 5W-40
TU5JP
Seq VG
TU3MS
M111SL
DV4 (or XUD11)
M111 FE
OM646LA (or OM 602A)
VW Tdi 28

29. Higher VI Group III Basestock, now available
Summary
Higher VI Group III Basestock, now available
Base oil manufacturers continue to search for innovative ways to maximize iso-paraffins and small-ring naphthenes in base oils
YUBASE plus is the first higher VI Group III base stock in the merchant market
There are no advisable effects in low temperature low shear property, seal compatibility and fuel economy
YUBASE plus is the same slate as SK’s Group III base stock,
but different base stock
In several API engine tests, YUBASE plus based oils showed better results, and ACEA engine tests are conducting to demonstrate Base Oil Read Across between existing YUBASE and YUBASE plus 29