Used oil or waste oil is any oil, whether refined from crude or synthetic, that has been contaminated by physical or chemical impurities as a result of use.
Waste oil is typically derived from automotive and industrial lubricants, including spent motor oil, hydraulic fluids, refrigeration coolants, metalworking and cutting oils, and electrical insulating oil.
Among the facilities generating used oil are vehicle repair shops, fleet maintenance facilities and industries
It was not longer than twenty years ago that people began to see oil as a limited resource.
Most waste oil (if it was collected at all) was disposed of by burning for heat or blending with other fuels. Nowadays, through improved technology and varying levels of regulations and incentives, of the total used oil generated globally, about 75% is collected.
The remaining 25% is combusted, re-used without appropriate treatment or discarded. Of the total waste oil collected, developed countries in Europe and Americas send 50% for refinement while in developing countries the percentage refined is far less.
The overall global trend however is moving towards a greater drive for refining.
Globally, four major reasons are driving this momentum of refining used oil.
Firstly, the quality of re-refined base oils is improving dramatically. The overall improvements in the refining process and improvement in the quality of used oils collected due to better collection practices and the use of high quality base stocks in virgin lubricants.
Second, rising crude oil prices have driven up base oil prices, making re-refining economically attractive.
Third, recent studies by the US Environmental Protection Agency (EPA) have also revealed that there are significant economic benefits of waste oil refining. Tests conducted have shown that reprocessing used oil consumes far less energy and resources than refining crude oil from the earth. (For example, it takes only 4 litres of used oil to produce 2.5 litres of new engine oil. But when starting from scratch, that same 2.5 quarts would require 160 litres of unrefined crude oil to manufacture.)
Fourth, environmental standards across all countries, developed and developing, are becoming stringent. Tests have shown the 4 litres of oil dumped into a river can contaminate 4 million litres of water and have disastrous effects on our planet's ecosystem.
Within the GCC, waste oil refining is a relatively new phenomenon, led by UAE and Saudi Arabia. Being at the epicentre of oil production, historically, the region never saw the reason for refining waste oil. In-fact many local governments discouraged it as it was perceived as competition to the state owned grease and lube manufacturers.
The perception changed slowly as gas stations, garages and waste oil producers saw refiners as an economical way of disposal of the used oil, which would have alternatively caused them time and money for disposal. It was not until the mid ‘90s that governments and companies realized the economic benefits realized by waste oil refiners that they started charging for waste oil supply.