ExMo Reenters Vietnam

ExxonMobil is reentering the Vietnamese finished lubricants market via two distributors after selling its blending plant and most other lube assets there to Total in 2009.

The American energy giant said its workingwith two distributors - Pan International Petroleum and Tat Petroleum Vietnam - to sellits Mobil brand of automotive and industrial lubricants.

Vietnam is a growing market for lubricants, and [the company is] serving its customers needs through distributors, an ExxonMobil spokesman said when asked about the return.

One industry analyst told Lube Report Asia that the dynamics of Vietnams lube market may have changed in the interim period, and that ExxonMobil may be able to achieve higher margins now.

In 2009, the Vietnam lubricants market was heavily dominated by low-margin, two-cycle oils for motor bikes and scooters, said Stephen B. Ames of SBA Consulting. Moreover, the lubricants were distributed through small, mostly independent workshops, and that took a lot of sales effort.

Being one of the last major international lubricant brands to enter the market and operating with a relatively small volume, ExxonMobil must have decided the operations were not core to its global lubricants business, Ames supposes.

Total, which had been operating on a significant scale there, saw an opportunity to merge ExxonMobils assets to achieve greater efficiencies and cost savings, he continued. Although financial terms of the sale were never disclosed, Ames suspects that Total likely paid an attractive price.

ExxonMobil will likely operate in Vietnam with a different strategy than it did before, Ames said. While its volumes may be smaller, its sales should be more profitable. I dont see ExxonMobil getting back in the Vietnam market with the same commodity lubricants offerings.Its reentry is likely to be centered on the high-margin, Mobil 1-type products for that growing sector of the market.

Its likely that ExxonMobil will import lubes made at its Singapore blending operations, which is undergoing expansion.

At the time of the Total sale, ExxonMobil noted that it would retain its Vietnam-based international marine and aviation lubricant business.

Tat Petroleum Vietnam is a subsidiary of Singaporean SHS Holdings Tat Petroleum Pte.