South Korean base oil refiner GS Caltex plans to invest 3 billion South Korean won (U.S. $2.6 million) to launch a finished lubricants business in India in April, as part of an effort to create new export markets for its products.
GS Caltex India will be based in Mumbai, according to the Feb. 17 announcement. The company said it chose India as a location because the countrys lubricants market is about 4 trillion won ($3.5 billion), the worlds fifth largest major market behind the United States, China, Japan and Russia.
Because the Korean market is suffering from a slowdown in growth, the company said it needs new foreign export markets for finished lubricants. More than 50 percent of its petroleum and petrochemical sectors revenue comes from exports, GS Caltex stated, and its base oil sector gets more than 80 percent of its revenues from exports. In contrast, the refiner pointed out, about 80 percent of its finished lubricants sales are in the domestic market.
GS Caltex, based in Seoul, noted it has continued to expand its export volume of finished lubricants to China and Russia. It plans to increase its portion of exports of finished lubes to major global markets from 20 percent of its business to more than 50 percent by 2015. Under the plan, GS Caltex hopes to grow its lubricant sales from 350 billion won ($302 million) to one trillion won ($863 million).
Korea and India signed a Comprehensive Economic Partnership Agreement (CEPA) in August 2009 that went into effect in January. The agreement aims to encourage price competitiveness by cutting tariffs on lubricants and a variety of other products over the next 10 years.