Shell (China) Ltd. plans to build a lubricants blending plant with 200 million liters (52 million gallons) per year capacity that will open in 2009 in southern China, while expanding capacity at several other existing blending plants in the country.
The company on Friday said it will eventually increase the plants annual capacity to 400 million liters, making it one of the top three lubricants blending plants in the Shell lubricants network worldwide.
The facility will blend a wide variety of lubricants for consumer, industry, transport and marine, Shell Lubricants spokeswoman Patricia Singer told Lube Report.We see demand in the region continuing to grow — this plant will supply south China, where growth is particularly strong, as well as potential for the wider region too.
Singer said the company continues to learn new things from each plant and new facility that it opens, and leverages the findings within each new facility. Its a constant learning experience from each one that opens up, she said.
The official groundbreaking for the plant took place June 22 near Zhuhai, in Guangdong Province, and commercial operation is expected to start in 2009. Its too early to predict how many employees will work at the new planet, according to Singer.
This project represents delivery of Shells strategy of more upstream and a profitable downstream business by focusing investment in growth markets, said David Pirret, executive vice president, Shell Lubricants.
Shell currently has five lubricants blending plants in China, including three acquired in 2006 with Tongyi. The Zuhai plant will be the sixth and will blend both Shell and Tongyi branded lubricants. The company also has lubricants blending plants in Singapore, Thailand, Malaysia, the Philippines and Indonesia.
It will also carry out a series of expansions at existing lubricants plants in China. Shell said it plans to double capacity at its Tsing Yi lubricant blending plant in Hong Kong to 120 million liters per year.
The company plans to increase capacity at its Tianjin (Beijing) and Zhapu (Shanghai) blending plants in China by up to 20 percent. Over the next 12 to 18 months, Shell said it will boost capacity at its grease plants in Thailand, the Philippines and Singapore to meet the growing demand for specialized industrial lubricants in the region.
The Chinese market for finished lubricants stands at about 5.1 million metric tons per year, or about 13 percent of the global total, according to estimates from consultant Kline and Co.s Business Opportunities and Threats in the Dynamic Chinese Lubricants Market, 2006-2011. According to Kline, the Chinese national lubes market is expected to grow by 7 to 10 percent per year over the next five years.
Shell became the leading international energy company in Chinas lubricants market in 2006 following acquisition of a 75 percent share of Beijing Tongyi Petroleum Chemical Co. Ltd. and Tongyi Petroleum Chemical (Xian Yang) Co. Ltd, which produce and market Chinas leading independent lubricant brand, Monarch. Among other benefits, the acquisition provided a major increase in distribution opportunities for Shell.