Valero Marketing and Supply Company and Nynas USA, Inc. said last week that they completed a long-term marketing agreement for the naphthenic base oils produced at Valero's Three Rivers, Texas refinery.

Under the deal, Valero will purchase technology from Nynas to upgrade the naphthenic base oil processing facility, improving the product yield and increasing the throughput capacity of this unit. Also, Nynas will purchase the total naphthenic base oil production from the facility and market the products to domestic and international customers.

Valero expects the upgrade of its naphthenic base oil processing facility to cost approximately $10 million and the unit to be in service during the third quarter of 2004. This project will increase the plant's production of naphthenic base oils by 50 percent, enabling the plant to produce approximately 35 million gallons per year.

Valero will upgrade, operate and maintain the facility, as well as purchase and supply all of the crude oil. Nynas will have the rights to all naphthenic base oils produced at the plant starting June, and it will assume all logistical and transportation costs as well.