S-Oil and Total on Monday signed an agreement to form afifty-fifty joint venture, S-Oil Total Lubricants Co. Ltd., that combines S-Oils lubricant business division and Totals lubricant subsidiary in South Korea. The new venture, jointly managed by S-Oil and Total, will have capital of 35 billion won (U.S. $34.7 million).
The joint venture will offer a variety of finished automotive and industrial lubricants for the domestic market in South Korea. The companies said they have agreed to eventually integrate their lubricant facilities into a plant in South Korean oil refiner S-Oils Onsan refinery, along with an expansion project. Seoul-based S-Oil said that it will expand the lubricants blending plant at its Onsan refinery to more than 2,500 barrels per day by 2009, more than doubling the current capacity.
According to Total, its upcoming joint venture will have a blending capacity of about 140,000 metric tons per year. The new j.v. will operate at the beginning two blending plants located in Onsan – the one purchased from Isu Chemicals, and the one purchased from S-Oil – with a view to combine overall production in a single site in the near future, Total press officer Elisabeth de Rals told Lube Report.
Earlier this month, Courbevoie, France-based Total announced an agreement to purchase the 49 percent stake held by its Korean partner Isu Chemical Co. in their lubricants joint venture, Total-Isu Oil Co. Ltd., which has about 93 employees.
Total-Isu had an estimated 7 percent share of South Koreas combined lubricants market – including automotive and industrial lubricants, and process oils – in 2007, according to Geeta Agashe, vice president, petroleum and energy, for Kline and Co. in Little Falls, N.J. SK, GS Caltex, ExxonMobil, S-Oil and Shell have larger market shares than Total-Isu in South Korea, Agashe said. Overall, South Korean lubricants demand for 2007 is estimated at 725 kilotons, she added.
We believe Total can bring its advanced technology and globally proven marketing know-how in the field of the lubricants business to the new joint venture, Dong-Hoon Lee, manager of S-Oils public relations team, told Lube Report. S-Oil will also contribute its full range of quality lube base oils produced from its refinery, and the blending plant is to be expanded to process all combined volume. Lee said the joint ventures management will determine its brand policy after start-up.
De Rals said the joint venture is part of Totals strategy to develop its refining and marketing activities in the Asia-Pacific region. This new j.v. will combine the activities of the leading producer of base oils in Korea – S-Oil – with those of the worlds fifth largest lubricant marketer – Total – in order to become a major player in the lubricant market in Korea, she said. This will give to both companies much more brand visibility, economies of scale, as well as significant synergies in terms of operations. S-Oil was the right partner to set up a company with, and to try to grow.
Total since 2003 has also operated in South Koreas petrochemical sector, via a joint venture with Samsung called Samsung Total Petrochemicals. According to Total, the Daesan petrochemical complex has production capacity of 650 kilotons per year of ethylene, 670 kt/y of styrene, 600 kt/yr of paraxylene and 670 kt/y polyolefins marketed in South Korea as well as for export.