Allegheny Petroleum and its distributor partner Paramount Trading Jamaica Ltd. will build a 7,500 metric tons per year lubricants blending plant in Kingston, Jamaica, with commissioning expected at the start of 2017.
The joint venture blending plant will encompass 15,000 square feet on a 1.5 acre site, Allegheny President Jim Kudis told Lube Report. Initial storage at the facility will be about 680 tons. Kudis confirmed that Allegheny is providing information technology – such as accounting and inventory control software – and equipment such as tanks and pumps for the project.
Paramount Trading Jamaica will operate the plant and provide personnel, as well as the land, he said, which is adjacent to a current Paramount plant. Allegheny declined to disclose the cost of the project.
The initial focus is going to be on heavy-duty [diesel engine oil], and all the ancillary products that go with it, he said, including transmission fluids, gear oils and hydraulic oils. The company will also import grease as a finished product from its U.S. facilities, he added.
The company is also working on producing passenger car motor oils at the plant. On the island very few American cars are present, its mostly European or Asian cars, Kudis noted, adding that Allegheny is working with one of its additive suppliers to get the necessary approvals, including meeting European Automobile Manufacturers Association (ACEA) specifications.
Allegheny plans to have a full lubricant analysis and testing laboratory running at the Kingston site in about two weeks. Among its services will be quality control, as well as oil analysis focused on extending drain intervals. Right now were doing testing on a lot of fleet customers in Jamaica and have to send samples back here, which results in a long turnaround, Allegheny Vice President Barbara Kudis said. Part of this is to try to help them bring efficiency. If we have testing right there, we can tell them right away.
Jim Kudis noted Allegheny has spoken with several major Jamaican trucking and mining companies about the American Petroleum Institutes new API CK-4 heavy-duty diesel engine oil category and the benefits of using that type of product. CK-4 is backwards compatible with previous heavy-duty categories such as API CJ-4. What we find out is theres not a lot of information shared in Jamaica, he said. Theyre embracing somebody actually keeping them current with whats going on in the Western world. Thats the satisfying part about working with them.
Allegheny currently has two significant customers in Jamaica. Weve got commitments from several other larger customers to evaluate some of the lubricants we have, he added.
The relationship with Paramount Trading Jamaica started in 2011, when one of Alleghenys major accounts asked it to serve one of its mines in Jamaica. Theyve been a very good distributor for us, Kudis said. Over the years as Ive traveled to Jamaica, I got to know the president of the company. We started talks about building a plant. So that was a culmination of a five-year relationship with what we feel is a good partner.
Manufacturing in Jamaica will also give Allegheny advantageous access to other parts of the Caribbean, Kudis explained, since trade between nations there is duty- and tax-free. By manufacturing in Jamaica, we are able to bypass duties that some finished goods are taxed at, which brings our cost down and allows us to trade throughout the Caribbean, which we plan on doing, he said. This is phase one – getting the plant up and running, manufacturing lubricants for Jamaica itself. Then were going to look at all the other islands. With Shell shutting down its Trinidad and Tobago blending plant and other things of that nature, a small vacuum exists in the Caribbean for a smaller independent like ourselves to manufacture.
Earlier this year, Shell said it planned to close its lubricant blending plant on the west coast of Trinidad by June, saying the facility couldnt remain profitable in the current market. Shell planned to continue supplying lubricants in Trinidad and Tobago via a macro-distributor.
George Morvey, industry manager for Klines Energy Practice, said Kline estimated Jamaicas total finished lubricant demand at about 10,000 to 15,000 tons for 2015. About 70 percent of that is automotive, Morvey said, and the remaining 30 percent is industrial. Kline estimated that Chevron, Shell, BP and ExxonMobil combined supply about 80 percent of the finished lubricants consumed in Jamaica.
In March 2015, Pico Rivera, California-based Lubricating Specialties Co. opened a lubricants blending facility in Jamaica to support customers in the Caribbean and Latin America.
Wilmerding, Pennsylvania-based Allegheny currently has blending plants in Pennsylvania in Wilmerding and Ambridge; Boonville, Indiana; and Angleton, Texas.