Chevron will exit the lubricants market in India next month, the company confirmed in a statement provided to Lube Report yesterday. An industry consultant cited the intense competition in Indias market as a likely factor in the decision.
The decision was taken following a review of our business for sustainable growth and is aligned with Chevrons global strategy of portfolio optimization, the company said. Chevron sees India as having strategic importance in the world energy market and will continue to monitor the market for longer term potential. Chevron maintains a presence in India through its additives joint venture, aviation fuels and technology licensing businesses.”
Little Falls, N.J.-based consultancy Kline and Co. estimates total demand for finished lubricants in India at 1.5 million metric tons, valued at almost $2.5 billion in 2008. The commercial automotive segment represents about 54 percent of the total, Kline estimates, followed by the industrial segment at 34 percent, and the consumer automotive segment at 12 percent.
Geeta Agashe, Klines vice president of petroleum and energy, noted that Chevron’s market share in India is not very significant.
This move makes sense to us because the Indian market is very, very competitive with such national oil company players as Indian Oil, Hindustan Petroleum, Bharat Petroleum and others competing with such multinational corporations as BP, ExxonMobil and Shell, [and] competing with such independents as Gulf Oil and others, Agashe told Lube Report. In comparison to some of these others, Chevron has been somewhat of a late entrant into the Indian lubes market, and we speculate that they might have chosen to save those resources spent in India and use them in other growth markets wherein they might have a better position. Its all about portfolio and product optimization for the oil majors, given the impact of the global recession.
Chevron Global Lubricants has been in India since 1993. According to Chevrons India Fact Sheet, its lubricants company there is headquartered in Mumbai, with regional offices in New Delhi, Chennai and Kolkatta. The lubricants business in India caters to consumer, commercial and industrial segments. In 2007, the Chevron brand launched in India, replacing Caltex. The company continued to sell Delo and Havoline branded products.
Chevron said its products are blended to its specifications through blending agreements in India. The company sold its blending plant in Chennai in 2008.
Chevron Oronite came to India in 1989, manufacturing and selling additives for lubricants through Indian Additives Ltd., a 50-50 joint venture with Chennai Petroleum Corp. Ltd., which operates a manufacturing facility on the outskirts of Chennai.
Chevron, through Caltex, started selling petroleum products in India in the 1930s. In 1957, Caltex built the Visakh Refinery. In 1987, Chevron licensed its Isocracking technology to Indian Oils Vadodara refinery. Subsidiary Chevron Lummus Global continues to license Isocracking in India as well as Isodewaxing and Isofinishing technologies, which also contribute to production of base oils.