The story of Venoco, which today enjoys $280 million in sales, illustrates the history of Venezuelas lubricants market, Barreto said. In 1960, the country was just starting to recover from a 10-year dictatorship. Oil businesses upstream and downstream alike were operated by concessions granted to multinational oil companies. Venoco became the first Venezuelan-owned company in transforming hydrocarbons locally, inaugurated June 12, 1960, said Barreto, who joined the company that year as laboratory chief.

In 1960, lubricants were imported, except for straight grades of oils. By 1963, Venoco was the first Venezuelan company blending and packaging a full line of automotive and industrial oils, and was custom blending for Valvoline, Esso, Shell, Mobil, Phillips 66 and Amalie. By 1963, Barreto said, Venoco had 5 percent of the countrys lube market.

The two decades from 1973 to 1993 were a period of nationalization, when the state held a monopoly on marketing all hydrocarbon-related materials. Venoco survived by blending for the state-owned companies, said Barreto, and was able to keep and protect its brand through exports, local sales of synthetic-based lubricants, and sales of non-lubricant products such as chemicals and solvents, which now make up 64 percent of Venocos tonnage.

The open market period that began in 1994 saw the relaunch of Venoco lubricants, a very difficult task after 20 years with no marketing or publicity at all, said Barreto. In 1995, Venoco entered a joint venture with Mobil to manufacture grease and lube oils. Venoco bought back its equity from ExxonMobil in 2007, when ExxonMobil sold its Venezuelan assets.

Todays lubricant market in Venezuela totals about 290,000 metric tons per year, with 68 different brands and 27 lube blending plants. PDVSA holds 36 percent of the market, followed by Venoco (which continues to market the Mobil brand in Venezuela) with 21 percent, Shell with 7 percent, local blenders Inca and Puramin with 6 and 5 percent respectively, then Texaco with 3 percent. Small companies account for the remaining 22 percent.

Barreto provided details on Venocos end user markets, which he believes are representative of the countrys lube market as a whole. Venezuelas population is 26 million, and we have 4 million vehicles, one car per six people, said Barreto. Some 420,000 vehicles were sold in Venezuela in 2007, of which 75 percent were imported. Not surprising, passenger car oils make up Venocos largest market, about 56 percent of its total. Other market industries are electric (11 percent); petroleum (7 percent); mining (6 percent); commercial transportation (6 percent); steel mills (6 percent); and other industries (8 percent), including automotive parts, cement, sugar mills and aluminum. The majority of lubrication requirements are covered by what may be called traditional products, Barreto said.

With 99 percent of the countrys passenger vehicles gasoline powered, the government in 2008 adopted a decree to protect vehicle owners from obsolete engine oils. Lubes must satisfy at least the API SL, and for diesel engines the API CF service levels, said Barreto. All lube blending plants are audited by the Ministry of Mines for compliance with this quality mandate. Many of the small companies have disappeared as a result, he noted.

Because PDVSA produces only Group I base oils (plus some naphthenics which are mainly used for insulating oils and greases), meeting the latest engine oil specifications is a challenge for domestic blenders. Bureaucratic steps must be accomplished to get the required permits to import Group II base oils, Barreto said. And finished lubricant demand is met by local production, except for specialty products such as food-grade lubricants and synthetics, so there are very limited lube imports.