HF Sinclair Corp. has lined up long-term supply arrangements to support the transition of the company’s lubricants and specialties products business in parallel with its recently announced plan to retire its 15,600-b/d base oil refining plant in Mississauga, Ont.

After revealing a downstream integration strategy on July 28 involving the proposed closure of its Canadian refining business and transformation of its lubricants and specialties products segment, HF Sinclair confirmed on Aug. 3 that it entered into strategic long-term commercial agreements with suppliers SK On Co. Ltd.’s SK Enmove and Chevron USA Inc.’s Chevron Products Co. to establish a diversified North American base oil supply network.

As part of the August agreement that aims to support maintaining base oil coverage after the Canadian refining assets are retired, SK Enmove and Chevron Products will supply HF Sinclair with Group III and Group II base oils, respectively, according to the companies.

In return, HF Sinclair said its lubricants and specialties business will serve as a distributor for SK Enmove’s YUBASE Group III base oils in key regional markets in North America, as well as distribute Chevron-branded Group II base oils in Canada and select US regions.

The supply arrangements come as part of HF Sinclair’s transformation and separation of its lubricants and specialties segments via the capital markets to create “two independent public companies in a manner that is tax-efficient for HF Sinclair and its shareholders,” according to the operator’s July 28 presentation to investors.

HF Sinclair said it expects the new lubricants-specialties company will to drive organic growth and consolidate a highly fragmented global lubricants and specialties market, leading to reduced earnings volatility supported by diversified end markets and a differentiated finished and specialty mix of products.

Subject to customary conditions and final approvals, HF Sinclair said the separation of the lubricants-specialty segment will be executed over the next 12–18 months, with the Mississauga base oil refinery’s retirement to be substantially completed by yearend 2027.

During the segment-separation period and associated decommissioning of the refinery, the operator said its lubricants-specialty business will maintain a strong presence in the Ontario region, including continued operation of its research and development laboratory, lubricant blending and packaging activities, and supply chain, logistics, and commercial operations.

The independent, separated lubricants-specialty business will maintain access to Group I base oils and specialty products from HF Sinclair’s 125,000-b/d refinery in Tulsa, Okla., the operator said.

Together with the new long-term procurement sources for Group II and Group III base oils, HF Sinclair said, post-spinoff, it expects to offer a full suite of Group I, Group II, and Group III base oils to the market.

Following separation of the lubricants-specialty segment, HF Sinclair said it plans to become a more agile, cash-generative integrated downstream operator with it existing footprint of seven main crude oil refineries, integrated pipeline and terminal assets to support refining operations, a marketing business tied to its network of Sinclair-branded stations, and renewable diesel production.