The plant in Zhuhai is ideally situated to serve the southern China market, Barrett told Lube Report. With this new plant, we have a network of six strategically located lubricants blending plants in China, and are well positioned to meet demand growth across the country. Its estimated that about 300 people will be hired for the first phase of the plants operation.

Located in Guangdong Province, the blending plant will produce consumer, transport, industrial and marine lubricants targeted at the Chinese market.

In its Thursday announcement, Shell also outlined new investment in a technical facility at the complex. Technical services offered will include a quality control laboratory to provide key customers and original equipment manufacturers in the automotive industry with technical research, marketing and training services related to their lubricants applications.

The investment in a lubricants blending plant in Zhuhai is part of Shells strategy of selective downstream growth and allows us to support demand from local and international customers based in China, which is the worlds fastest growing lubricants market, said David Pirret, executive vice president for Shell Lubricants. Once the technical facility at Zhuhai is completed, our customers in China will have the opportunity to experience our leading lubricants technology capability firsthand.

According to Little Falls, N.J.-based consultancy Kline and Co., Shell is the largest international lubricants supplier in Asia by sales volume and the top international supplier of lubricants in terms of market share in China.

Kline & Co.s Flora Liu, a Shanghai-based manager, has said that Chinas lubricant market was estimated at 5.5 million metric tons, valued at $12.1 billion, in 2008. By volume, Liu said, Chinas market is 46 percent industrial oils, 39 percent commercial on-and off-highway automotive oils, and 15 percent consumer automotive (which includes lubricants consumed in all gasoline-powered vehicles, such as passenger cars, motorcycles, mini-buses and taxis).

Although the consumer automotive market is only 15 percent by volume, Liu noted, it accounts for 22 percent of the market by value, or nearly $2.7 billion. She noted it has become a more sophisticated market. For example, higher-end engine oils (API SG and above) are projected to account for 80 percent of the consumer segment by 2013, up from 60 percent today.

An expert with Petrochina has said that Chinas finished lube demand is expected to rise from 5.7 million tons last year to 6.05 million tons in 2010 and to 7.3 million tons by 2015.

Kong Jinyuan, senior engineer and vice director of oils research in the marketing department of the Beijing-based Petrochina Planning & Engineering Institute, has said growth in passenger cars will be the key driver to Chinas lube market. Jinyuan noted the number of vehicles in China has grown from 16 million in 2000 to 51 million in 2008, while lubricant demand rose from 3.8 million tons in 2000 to last years 5.7 million tons.