In an interview with LubesnGreases EMEA, Geneva-based multinational SGS, a leading provider of inspection, verification, testing and certification services across Africa, painted a picture of a competitive but exciting market. The company shared its plans to entrench its lubricant testing services in sub-Saharan Africa and selected markets in North Africa.

Market Overview

The African lubricant testing market is still very young, and the growth potential for lubricant supply and oil analysis services is exciting, said Adrian Allman, SGS global business development manager, at the companys used oil analysis center SGS OGC Vernolab. An estimated 3,900 lubricant consumers in the construction, automotive, and oil and gas sectors globally rely on the center for used oil analysis and equipment condition monitoring.

Allman said Africas used oil analysis and general lubricant testing market provides unique opportunities for providers of the service. Potential customers occupy diverse emerging market segments such as oil exploration, refining, mining, manufacturing and power generation from both fossil and renewable sources. The diverse economic sectors make the African market unique because different customers have slightly different oil testing and analysis requirements, he said.

Despite the growth potential, Allman explained that Africas lubricant testing market faces many challenges. The most significant is inadequate education of consumers about the importance of oil analysis, which entails examining lubricant properties, contaminant levels and wear debris in the oil.

He said incorporating used oil analysis as part of routine maintenance will enable lubricant users to substantially reduce downtime and equipment repair, cut maintenance costs and increase productivity. Established manufacturing markets have embraced the philosophy of predictive maintenance and no longer see oil condition monitoring as a cost but as a key part of their maintenance programs.

Allman related that SGS tests up to 15,000 samples of used oil a year in Africa and an estimated 1 million globally. The companys clients cut across petroleum, mining, power generation and fuel additive sectors, including Total, BP, BASF, General Electric, Sonatrach, Engen, Vivo Energy, Geita gold mine, Acacia Buzwagi gold mine, Sahara and Sandvik.

SGS operates oil analysis laboratories in Tanzania, South Africa and Mauritius, with the capacity to test 5,000, 9,000 and 2,500 samples per year, respectively. Other SGS laboratories are in Morocco, Algeria, Ivory Coast and Nigeria. SGS also services countries where it does not have laboratories, such as Angola, by simply shipping the sample to a country with the facility to analyze the oil, said Allman.

One focus area for SGS in the African market is providing testing services for oil blending facilities either on-site or at an SGS laboratory to ensure that new lubricants meet production specs.

Testing Used Lubes

SGS also plans to expand its used fluid testing service in Africa, with particular emphasis on lubricants, transformer oil, greases and other fluids. Testing will be done in the field and at remote sites as a predictive monitoring tool to help companies reduce operational costs and eliminate machinery failure.

One of SGS clients, Total in East Africa, operates a lubricant diagnostic laboratory in Kenya, where an estimated 50 lubricant tests are performed daily for its product consumers in the region. The company runs a quality control laboratory in Mombasa that monitors the products distributed by the lubricating oil blending plant, Total says on its website.

SGS uses a standard procedure to test lubricants for its African clients, starting at the point where the user orders and receives the companys oil sampling kit. The kit can be prepaid to include all costs upfront.

The customer takes the sample, fills in the sample label (on paper or online) and sends the sample to an SGS laboratory, where it is registered into the companys laboratory information management system and tested, said Allman. LIMS is an in-house computer system that Allman claimed is unique to SGS and has been in constant evolution over many years.

The system keeps valuable information on customers, the lubricant testing equipment, the lubricant itself and more than 30 years of analytical data. It allows us to provide a report with adequate technical advice and comments, said Allman.

SGS has deployed a variety of equipment to measure or evaluate lubricant quality and condition. The equipment includes viscometers to measure flow resistance, Inductively Coupled Plasma instruments to measure metals content, Fourier Transform Infrared to determine oil degradation and contamination levels, ferrographic techniques to evaluate wear particles, chromatography to determine contamination or degradation products, titration equipment to evaluate total acid number, base number and water content.

SGS has agreements with leading global lubricant testing equipment suppliers for equipment that allows the company to standardize test processes across all our laboratories, said Allman. He added that where an equipment vendor is not available in a country or the service is poor, the local laboratory can source the test equipment from another vendor.

Breaking into the Market

Penetrating Africas lubricant testing market is a challenge for new entrants, according to Allman, because the region has attracted numerous competitors, some that have old and strong relationships with lubricant customers. New entrants to the market have to grapple with existing ties between lubricant users and suppliers in this market. For its part, SGS has taken advantage of its close ties with some lubricant blenders and suppliers in Africa to entrench its lubricant testing services in the continent.

In Kenya, SGS has been involved in the launch of a mobile fuel testing laboratory by Vivo Energy Kenya, which distributes Shell lubricant brands. Set up two years ago, the mobile laboratory was the first by an oil marketing company in Kenya. Vivo said that the laboratory makes it possible for its automotive clients to check fuel quality at any Shell fueling station in addition to running tests that are routinely done at the companys laboratories in Nairobi.

The mobile fuel laboratory can conduct tests on site and generate a report within 30 minutes. It also sends samples to laboratories in Nairobi and Mombasa for further analysis where quality issues are detected.

SGS is gaining traction with potential customers in remote areas such as mining operations and off-grid power generation installations by offering the services of the mobile lab. Situating the lubricant testing laboratory close to or actually on the customers premises is one of the ways a diverse market such as Africa can be penetrated, Allman said. He added the mobile operation comprises a working laboratory inside a shipping container that contains all the equipment necessary to conduct used oil analysis.

What the Future Holds

The future of Africas lubricant testing market depends heavily the effectiveness of government agencies and lubricant manufacturers and suppliers in addressing undercutting among competitors, inadequate education among lubricant users and the persistent distribution of counterfeits in the markets supply chain. The current market value of used oil service is very low in Africa. One way for SGS to grow is to offer a service with perceived higher value that differentiates us from our competitors, said Allman.

The stiff competition in the still young lubricant testing market has led to undercutting among service providers, according to Allman. Oil analysis in Africa is perceived as being very cheap due to competitors constantly reducing prices to win business from one another, he observed. Despite this, we have found that customers are prepared to pay extra for a brand of perceived higher value.

For new entrants in Africas nascent lubricant testing market, low prices remain a major challenge. Once customers get used to a cheap testing regime, it makes setting up a new oil analysis facility in the region difficult because initial profits will be very small due to low margins.

In addition, the adulteration of fuel in many African markets by unscrupulous traders has opened loopholes for sneaking counterfeits into the market and making unjustified profits from unsuspecting customers. Counterfeit lubricants and fuels are a major problem for some of our clients and their equipment, said Allman. Major equipment failure, equipment downtime, lost production and expensive repair costs can be a result of using a counterfeit lubricant.

SGS sees another opportunity in Africas lubricant testing market through the formation of partnerships between testing service providers and OEM equipment manufacturers and lubricant suppliers. This can be another way to develop Africas lubricant testing market, said Allman. Customers in Africa can be very loyal and tend to stick with a particular oil analysis company or the service provided by the lubricant supplier.