LOCAL REPORT United Kingdom Paul Stephenson, OATS Ltd
The United Kingdom includes England, Scotland, Wales and Northern Ireland, with a total population of almost 68m. UK GDP’s exponential growth peaked at around £2.3trn before the financial crash in 2008, recovering to £2.17tr in 2019 and making it the sixth largest in the world. Service industries contribute more than 70% of UK GDP, primarily from the financial services sector, with industry (especially construction and manufacturing) providing around 17%.
Having joined the European Community (subsequently the European Union) in 1973, the UK’s membership came to an end in January 2021 (Brexit). Although a trade deal has been agreed, the UK’s European and global status is likely to change significantly.
The vehicle park, manufacturing and sales The UK remained the fifth largest carmaker in Europe in 2019, manufacturing some 1.3m cars (80% for export), 62k commercial vehicles and 2.2m engines. Volume car plants include Vauxhall (Opel), Honda, Nissan and Toyota, plus domestic (although mainly foreign-owned) brands such as Jaguar/Land Rover, Rolls Royce, Mini and Morgan. Brexit may result in some manufacturers re-siting operations elsewhere in Europe or Latin America.
Despite year-on-year car sales falling by almost 30% in 2020 to 1.6m, fully-electric and hybrid cars sales bucked the trend with exponential growth against 2019 figures. Although diesel vehicle sales continue to fall sharply, Mild Hybrid Electric diesel sales were more than 80% up on 2019. The UK’s best-sellers are Ford’s Fiesta and Focus, Vauxhall’s Corsa, the VW Golf and Mercedes’ A-Class and Nissan’s Qashqai SUV.
Base oil production Oil and gas production accounts for around 70% of the nation’s total primary energy and 90% of transport fuel needs, making it the third largest European producer and consumer. Around 25% is imported.
North Sea production peaked in 1999, making Brent crude a world trading benchmark and the UK a leader in technology development for off-shore hydrocarbon extraction. Although diminished, the UK oil and gas
46 LUBE MAGAZINE NO.161 FEBRUARY 2021
industry still contributed more than £15bn directly to the UK’s GDP in 2016 and supporting 300,000 jobs.
By 1973, there were 23 UK refineries. Today, only six now remain, owned by ExxonMobil, Phillips 66, Total, Petroineos, Essar Energy and Valero. A growing oil collection and re-refining sector produces light feed stock, with around 350,000 tonnes p/a collected and growth potential estimated at 700,000t p/a.
The Lubricants market UK lubricants production is represented by majors including Shell, ExxonMobil, Chevron, Total, and Gulf, plus strong independents such as Morris Lubricants, Witham, Millers Oil and Fuchs. With the UK government’s intention to stop fossil-fuelled car sales by 2030, lubes volumes are expected to decline.
Almost the entire UK market is based on Grp II, Grp III and Grp IV base oil-derived products, trending towards 0W, with many OEMS and aftermarket outlets specifying 0W-30 viscosities or lower. OEM influence is strong, with the majority of UK engine oil specs being automaker-specific. VW Group products dominate, followed by Ford.
In Summary Of all the European nations, the UK arguably faces the most uncertain short to medium-term future - not only economically, but for the lubricants sector in particular - primarily due to the ‘perfect storm’ of COVID and Brexit.
Even with a trade deal agreed, it will be some years before the full Brexit implications are understood. Trade tariffs, border controls, specifications and regulatory administration will only clarify as international relationships develop. The impact on domestic lubricants producers and marketers remains to be seen, as well as the majors’ – including British-originated BP – decisions on UK production and marketing activities.
The UK’s core strengths of technology and innovation are likely to see R&D growth and retention of a strong global influence in areas such as renewable energy, lubricants, vehicle and engine design.
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