Shell plans to build a 120,000 metric tons per year blending plant in Indonesia that will produce consumer, transport, industrial and marine lubricants.
The investment cost was not disclosed for the blending plant, which will be 100 percent owned by Shell. The plant will be at the Marunda Center, 22.5 kilometers north of Jakarta. The location is close to Tanjung Priok port and includes a jetty for import of base oils, Mark Gainsborough, executive vice president for Shell Global Commercial, told Lube Report. It is well connected to road networks and also provides easy access to Greater Jakarta and West Java regions, where we have a large customer base. The plant will have automated processes and a quality control system that tests at all stages of production.
It will be the largest blending plant operated by an international oil company in Indonesia, Shell claimed. Strong growth in lubricants demand is expected from Indonesia, Shell said in a statement, driven by new vehicle ownership and production, construction and industrial activity, especially in the power generation and oil and gas production sectors.
Consultancy Kline & Co.s study, Global Lubricants 2011: Market Analysis and Assessment, estimated 2011 total finished lubricants demand in Indonesia at 780,000 metric tons. Demand in 2011 was 40 percent consumer automotive, 34 percent industrial and 26 percent commercial automotive.
National oil company Pertamina led overall supplier market shares in Indonesia in 2011 with 55 percent, Kline found, followed by Shell at 9 percent, Top One at 7 percent, ExxonMobil and Federal Oil each with 3 percent, Total at 2 percent and others accounting for 21 percent.
In its study, Kline forecasts overall lubricants demand in Indonesia growing from 2011 to 2016 at a compound annual growth rate of 4 percent. Kline believes that Indonesia should also be a part of the BRIC (Brazil, Russia, India, China) group of high-growth markets. Kline is bullish about growth prospects and opportunities in Indonesia, Geeta Agashe, energy vice president at Kline & Co., told Lube Report.
According to Shell, the company has until now imported lubricants to Indonesia from its blending plants in Singapore and Malaysia. Shell in Asia also currently has blending plants in China, Hong Kong, Taiwan, Thailand, the Philippines, Vietnam, South Korea, Pakistan and India.
The company noted that bringing production closer to customers in Indonesia will allow Shell to supply a full range of motor oils, transmission oils and industrial lubricants to the market, with the potential to expand distribution to neighboring countries.
The lubricants we market in Indonesia are able to handle the range of vehicles and machines operating in Indonesia to meet the demands of both a rapidly growing population of motoring public and the countrys more demanding customers with high performance vehicles and more sophisticated heavy machinery, Gainsborough said. An example is our lubricants grades have been specially designed for the rigors of mining, one of Indonesias largest industries, where heavy, specialized equipment operate in extreme dry and wet conditions.