Milind Phadke, India-based director for Klines Energy Practice, said during a recent webinar on the study that national oil companies and others now account for 48 percent of the global lubricants demand. Examples include Petrobras, Lukoil, Sinopec, PetroChina and Indian Oil.

The national oil companies have gradually gained market share over the past 10 years.

These companies are growing more ambitious, and with the support of their government, they are focused on consolidating their position in their home markets, and the neighboring countries, Phadke said. Theyre also looking to expand into new markets. For this, they are preparing for their growth in terms of having an in-house supply of higher quality base stocks, having access to additive technology and having blend plants in the right locations. Theyre also focusing on building their brands, building their channels so theyre able to supply that volume.

Global mega majors Shell, ExxonMobil and BP make up about 30 percent of the demand, while regional majors (and global independents) such as Chevron, ConocoPhillips, Valvoline, Fuchs and Petronas account for about 21 percent. New competitors are emerging, and theyre challenging the market space occupied by the global majors, so this should make life more interesting for the global companies, he said.

Asia accounted for 42 percent of finished lubricants consumption, Kline estimated. North America was next at 25 percent and Europe had a 17 percent share. Phadke noted that Asian consumption has increased consistently since 2004, when it stood at 29 percent. To accommodate this increase in share of Asia, its Europe that has really declined, and North Americas consumption has shown some slight decline in the last few years, he said.

At the individual country level, the United States still leads with 21.6 percent of global lubricants demand, followed by China with 19.6 percent. We expect that in the next few years, given the difference in the growth rate for these two markets, China would be soon the largest lubricant market, he noted. Kline expects Russia to surpass Japan in 2012 as the fourth largest country market – each country currently has less than 5 percent of global lubricants demand.

Africa is another region where Kline sees potential for growth. As Africa develops its infrastructure, he said, the area has great potential for lubricants growth in mining, agriculture and infrastructure building.

In terms of lubricant types, heavy duty motor oil accounted for 23 percent of global lubricant demand, and passenger car motor oil for 18 percent. Another 12 percent consisted of automotive-related lubricants such as automatic transmission fluid, automotive gear oil and tractor hydraulic fluid.

On the industrial side, process oil is the largest product category with 14 percent of global demand. This category includes products such as transformer, rubber, white oils and printing inks.

Other industrial products include hydraulic fluids at 9 percent, general industrial oils – which includes industrial gear oils, turbine oils, compressor and refrigeration fluids – with 8 percent, industrial engine oils at 7 percent, metalworking fluids at 6 percent and grease at 3 percent.

Kline estimated synthetic and semi-synthetic lubricants accounted for about 12 percent of global consumption in 2011. Europe has the largest penetration of synthetic and semi products, reflecting the high quality of lubricants consumed in that part of the world, Phadke pointed out. In fact a number of country markets – for example, Germany, France and the UK – what we see is these countries have upwards of one third to one half of the total market consuming synthetic and semi-synthetic products.

At the other end, Asia, South America, Africa and Middle East have very low penetration of synthetics and semi-synthetics, in the range of 5 to 7 percent. North America is somewhere in between with about 12 percent penetration, trending more and more towards European levels, he said.

The surplus of API Group III base oil globally has had a variety of impacts on the synthetic lubricants market. With such an abundant supply of Group III base oils, and readily available additive packages, the ability to produce a synthetic is more widespread than before, he said. And here we actually see national oil companies stepping into this arena and promoting synthetics, which they havent done in the past.

With more original equipment manufacturers specifying synthetic lubricants for factory fill and requiring use of synthetics for engine oil changes, Phadke said, their use is becoming more widespread and facing commoditization pressure.

Synthetics are also branching into different categories, he said, including what are termed flagship synthetics on the high end, premium synthetics and then competitive synthetics which are typically store brands. The meaning, the value that you assign to the word synthetic is now getting diluted because there are a lot of very different products claiming the same label, and these products have very different price points, Phadke explained. That leads to some level of commoditization that will happen in this category.

He said a similar change is occurring in the synthetic blend lubricants market. It is getting very crowded, and synthetic blend itself no longer is associated with being a very high quality, performance product because so many of them are on offer.