Pure Oils Division Prospers as Brazil's Ipiranga Struggles for Focus

---

Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). At a time when the Companhia Brasileira de Petroleo Ipiranga (Ipiranga)(SAO PAOLO:PTIP) (Sao Paulo, Brazil) has contracted Chase Manhattan bank to implement a group restructuring plan and a possible sell-off of some of its operations the company's EMCA (Empresa Carioca de Produtios Quimicos) division is looking to expand exports of its high quality white mineral oils to world markets it has not previously touched. Sectors targeted are pharmaceutical, food, cosmetics, animal feed, veterinary, textiles and plastics.

At EMCA's high tech refinery catalytic hydrogenation is used to treat petroleum fractions. Lube base oils are the basic feedstock, which are purified under very high pressure (3,000 psi). In the duo treat process the oil is first combined with pure hydrogen, heated and then fed into a serial system of reactors containing a nickel/molybdenum based catalyst. This part of the process removes all the hydrogen, nitrogen and sulfur and 99% of the aromatics and olefins from the oil. Hydrogen is then used to purge the remaining impurities in gas form. The product is then heated and processed through reactors with a platinum/palladium-based catalyst. With double bonds on the carbon chain removed, the product is fractioned to eliminate any light hydrocarbons created in the refining process, and to adjust the specifications to customer requirements, including viscosity and density. In the final stage of the process the product is passed through a vacuum-drying system and screened, before 10ppm to 15ppm of vitamin E antioxidant is added to it.

The resulting very pure carbon chain is suitable for pharmaceutical and cosmetics applications where standards protect against any danger to human consumption and contact with the skin. The product must be colorless, odorless when cold and only produce a light petroleum by-product odor when heated. It must be litmus paper neutral and virtually free from fluorescence. It must pass three chemical tests: solid paraffin, carbonizable substances, and polynuclear compounds.

In the home Brazilian market EMCA supplies a number of the biggest U.S. multinational pharmaceutical and cosmetics companies. Exports currently go to Argentina, Chile Colombia, the U.S.A. and Venezuela and have stated going to Asia where the high purity gives the product an edge. EMCA is also looking at the South African cosmetics, pharmaceutical and foodstuffs markets. EMCA was acquired by Ipiranga from the U.S. Arco group (Atlantic Richfield merged with BP in 2000) (LSE:BP) (London, United Kingdom) in 1993.

The Ipiranga group distributes petrochemicals and chemicals throughout the Central and South American market and holds 23% of the Brazilian fuel distribution market with a network of 5,000 Ipiranga braded gas stations. Its chemical product range includes polymers, process oils, resins, and solvents used by the adhesive, paint, and rubber industries.

Although the EMCA division has a leading edge product aimed at growth markets, the Ipiranga group petrol and lubricant sales have fallen because of price gaps, fuel adulteration and tax frauds. Hence the arrival of Chase Manhattan and the prospect of a group re-focus which may lead to the sale of some divisions.