ExxonMobil on base stock trends

The world continues to face the challenge of making sure people have the energy and products they need to live healthy, prosperous lives while also addressing climate change. These are two challenges of great importance, both necessitating an inclusive approach with the full cooperation and effort of companies, governments, and NGOs worldwide in order to address these critical issues.

So both of these trends are going to shape the future for base stocks, including everything from total demand to the underlying demand trends to the higher qualities that will be needed to support efficiency improvements and new technologies. And so I really think the challenge for the industry during this period of change is to ensure that we've got base stocks and qualities available that can meet the needs of current and future engines and help keep them all operating at peak performance.

So while there's a lot of change and a lot of uncertainty, there also is opportunity for manufacturers that are working with their customers and strategically planning investments to reliably meet their customers' needs today and into the future.

Looking forward from 2010 to 2035, the projected growth rate for Asia Pacific is more than double the global rate at approximately 0.8% per year. This region will be the growth engine for the world as more people move into the middle class. Interestingly, the growth will be fuelled by demand increases in India, Southeast Asia, and China. In contrast, Americas and the Europe, Africa, Middle East regions will be essentially flat versus 2010 with demand offset by efficiency gains and electrification in mature markets.

We see continued growth in Group II and Group III to meet the increasing demand for improved efficiency across all sectors. Group III will grow at a faster rate than Group II, driven by the need in engine oils for low viscosity, low volatility base stocks with good oxidation stability. But despite that faster growth rate, our view is that Group II will remain the main grade.

Given the demand for higher qualities we also project a decline in Group I. There will still be a need for Group I, especially in certain applications where Group I just has performance attributes that are better suited than Group II. But in areas of overlap, where you could have either grade, our view is that Group II will continue to grow. So overall, while top line demand is relatively flat, the underlying trends are changing quite a bit.

We think that we'll continue to see growth of re-refined base stocks driven by emerging regulations, better enforcement of existing requirements and improvements in used oil collection and processing.

Right now, bio-based lubricants are still a small portion of the overall market and mainly used in applications in environmentally sensitive areas. Now, the size of the market and pace of bio-based oil adoption could be guided by a number of factors, and that includes everything from regulatory environment, feed availability, cost, and performance.

But as we look forward over the next few decades, it's a period of uncertainty as no single pathway has been identified that can both meet the needs for increased energy demand and society's ambition for lower emissions.

We're going to need multiple solutions, and the solutions that come forward are going to be a function of government policy, technology innovation, and consumer preferences.

So it's that combination of factors that are going to be what drives the types of solutions that are available in what time period and at what scale. So again, while there's a lot of uncertainty, there's also a lot of opportunity.

As part of our strategy, with advances in technology and the support of clear and consistent government policies, we aim to achieve net zero operated scope one and two greenhouse gas emissions by 2050. Now to that end, we've taken a comprehensive approach to create emission reduction roadmaps for our major operated assets. The roadmaps build on our 2030 emission reduction plans, which are within the Paris Agreement pathways, and notably include reaching net zero emissions in our unconventional Permian Basin operated assets by 2030.

Now in terms of lower emissions investments, through 2027 we plan to invest approximately $17 billion on initiatives to lower greenhouse gas emissions. These investments are designed to make possible reduced emissions in our operations and are also directed towards reducing others' emissions through commercialising and scaling technologies such as carbon capture and storage, hydrogen and biofuels.