In January, Total, the worlds fifth largest oil and gas company, ratcheted up its Middle East profile after signing an upstream agreement with Abu Dhabi National Oil Co. for a 10 percent stake in the emirates sizeable oilfields. Yet, away from the headline-grabbing deal, Total has been steadily building a lubricants business in the region through a combination of blending and marketing operations.
Indeed, the French company has not lost sight of the fact that the Persian Gulfs largest lubricant market – Saudi Arabia – requires a dedicated blending facility to service a fast-growing automotive market that is expected to reach 1 million units by 2020, according to Sulaiman Bilaus, a base oil and lubricants consultant in Saudi Arabia.
Total Marketing Middle East, a subsidiary of Total, was set up in 1990 with a regional office in the United Arab Emirates and has since established an office in Qatar. Under the Total and Elf brands, it markets a range of automotive and industrial lubricants, special and drilling fluids, greases, marine lubricants and other specialized products through a distributor network that covers the Middle East and Central Asia. In the U.A.E., Total has secured the largest market share among international blenders, at 12 percent, says the market research and consulting firm Kline & Co.
According to David Kalife, managing director, TMMEs blending plant located at Jebel Ali, a free zone located approximately 35 kilometers southwest of Dubai, can blend 200,000 metric tons of lubricants a year. In addition to its lubricants blending capacity, the plant can produce 12,000 metric tons of grease. First commissioned in 2000, the plant is the center point of Totals regional lubricants business.
The lube blending unit at Jebel Ali comprises manufacturing, storage, warehousing and transportation facilities. Here, the blending process is controlled by computerized PLC-based technology that targets a 98.5 percent threshold for first-time blends. The plant fills a variety of packages, including small cans, pails and drums (both metal and plastic) using high-speed filling machines supported by an automated end-of-line packaging process. Key automotive majors, industrial and marine customers are serviced through bulk tanktruck deliveries.
Kalife said there is a major emphasis on lubricant quality at the plant. It has been accredited ISO 9001, ISO 14001, OHSAS 18001, ISSSRS-Level 3, ISO 5000. And the plant was also awarded the Dubai Quality Award in 2004, EHS Award for Environmental Performance in 2006, Dubai Health & Safety Gold Award in 2008, ROSPA Gold Award in 2011, and Environmental Performance award from Ministry of Environment & Water in 2011. TMME also notes that the plant has fulfilled 3.5 million man-hours without a loss of working hours due to injury since it was commissioned.
With more than 50 blenders in the U.A.E., there have been mounting concerns about the preponderance of inferior and counterfeit products, Kalife said. Counterfeiting and use of [used] oils could damage the reputation of U.A.E. products as well as have a negative effect on the industry as a whole in the region. He added that the only way to control the growth of the lubricants black market is to enforce strict regulations and severe penalties for offenders.
On our part, he added, we are taking several steps, including built-in security features in the product and packaging, using latest technology to counter this nuisance.
What is interesting about Total Marketing Middle East is that, according to its website, the company produces a custom range of lubricants for Iran. It offers both Total and Elf products under the Quartz and Evolution brands. Mehrdad Vajedi, director of Permian Energy in the U.A.E., said this is due to the legacy relationship between Total and Behran Oil Co. in Iran.
Production of Total lubricants in Iran itself ceased when sanctions were imposed; however, Vajedi said the brand is available. There are certain distributors of Total who are buying from Total in Dubai and import to Iran. A spokesperson for Total Marketing Middle East confirmed the brands are marketed by our appointed distributor in Iran.
Diverse Portfolio
In the Middle East, Totals flagship engine oil is marketed under the Quartz brand, segmented into several tiers.
Total Quartz Ineo is sold in three variants: SAE 5W-30, 5W-40 and Long Life 5W-30. This last is a low-SAPS (sulfated ash, phosphorus, sulfur) product formulated to meet the technical requirements of Volkswagen vehicles. All variants comply with ACEA C3. The SAE 5W-30s conform to API SN/CF, and the 5W-40 meets API SM/CF as well as having a raft of original equipment manufacturer approvals.
Total Quartz 9000 oils for light-duty gasoline or diesel engines, are either fully synthetic or synthetic blends. They are available in Energy SAE 0W-30 and 5W-40; Future NFC SAE 5W-30; and Future SAE 0W-20, which is solely for gasoline engine applications.
Total Quartz 7000 aims at light vehicle applications in SAE 10W-40 and 15W-50 grades. As the name suggests, Total Quartz 4X4 is specifically formulated for SUVs or pickups operating in extreme temperatures; its available in SAE 15W-40 and 15W-50 weights. And Total Quartz 5000 SAE 10W-30, 15W-40 and 20W-50 are multigrade passenger car engine oils meeting API SL.
Under the Elf brand, the company produces a range of engine oils branded as Evolution 900 FT, Evolution 700 ST and Evolution 400. Their categories are similar to those marketed under the Total brand, and the Elf family includes transmission oils, coolants and greases. Other transmission oils marketed under the Total brand are designed for automatics, continuously variable transmissions and conventional manual gearboxes. The company also markets brake fluids and coolants.
Total is one of the relatively few oil companies to make lubricating grease, which requires specialized reactor vessels and production facilities, and it invests heavily in grease development research. Most of this research is carried out in Solaize, France. Total said all of its grease plants are environmentally friendly, and the use of lead and other heavy metals is banned. In the Middle East, the company markets multipurpose greases under the Multis brand, while complex greases sold under its Multis Complex label target higher temperature, longer life applications.
Total Marketing Middle East is also active in the marine and aviation markets. Its marine products hold approvals from all major marine engine manufacturers including Wartsila, Man Diesel, Caterpillar, Pielstick and Mitsubishi. In the aviation sector, it distributes Nyco Aviation products as well as its Aero range of lubricants. Like most of its competitors, Total Marketing Middle East supplies a multifaceted industrial market with lubricants for the cement, chemical, energy, food, steel, paper and trade.
Saudi Arabia Venture
Total claims it has been active in Saudi Arabia for almost 40 years but only entered the Kingdoms downstream sector in 2007 when it formed a joint venture with Zahid, a diversified Saudi Arabian conglomerate. Total holds a 51 percent share in the j.v., which is known as Saudi Total Petroleum Products. Headquartered in Jeddah it has branch offices and warehouses in Riyadh, Dammam and Abha.
The company produces lubricants and specialty products for the automotive, manufacturing and marine sectors at an automated blending plant in King Abdullah Economic City on the outskirts of Jeddah. The facility began production in May 2013 and according to company data has an initial production capacity of 25,000 metric tons of lubricants per year, operating a single shift. This could be pushed to 40,000 t/y by operating two shifts.
The j.v. is a relatively late entrant into the Saudi lubricants market, which is dominated by Petromin (33 percent), Fuchs (22 percent), Shell (18 percent) and Mobil (11 percent). Kline & Co. estimates Totals market share at 8 percent. The major base oil supplier in the Kingdom is Luberef, which supplies around 95 percent of the market. Total in Saudi Arabia and its partner Zahid did not respond to a request for comments.
Aggressive Marketing
Kalife said that TMMEs lead markets in this region are the U.A.E., Qatar and Kuwait. He views the Jebel Ali plant as ideally placed to service what he estimates will be 8 percent annual growth in the U.A.E.
The company runs a number of campaigns throughout the Middle East that mirror its global strategy and support Total distributors. Rapid Oil Change, its fast-lube service, has proven successful in the region. It is based on a pit-stop type concept that has mechanics recommending oil change packages that include complimentary safety checks and top-ups. Additionally, the company has created Total Quartz Pit Stop, a similar offering that focuses on the Quartz range of lubricants and offers the same customer interactions.
According to Total, this kind of close interaction with consumers boosts trust and reinforces its reputation by promoting the most suitable lubricants as well as value-added services. Even so, Total faces tough competition from companies like Emirates National Oil Co. (Enoc) that have unrolled a similar concept throughout the Gulf Cooperation Council area.
Innovating for the Middle East
The region is not without challenges, and Kalife said innovation is fundamental to retaining a competitive advantage. The lubricants market has been growing in GCC countries but is stagnant in politically disturbed countries in the region. There are pockets of growth in Saudi Arabia and U.A.E., but it is stagnant or receding in countries like Yemen, Afghanistan, Syria, Iran and Iraq.
This poses a risk when it comes to planning strategy, but he said Total has a patient outlook. We expect in the long term the environment will be more conducive to doing business, for example, in Egypt, where Total has taken a long-term perspective and allocated resources and investments.
Kalife pointed to several innovations that he said show Total is delivering products that are relevant for the region, including Rubia TIR 9900, an SAE 10W-40 heavy-duty synthetic engine oil meeting API CI-4; the Quartz 9000 Future 5W-30 mentioned above (a low-SAPS, API SN/ILSAC GF-5 Resource Conserving product recommended for many American and Japanese cars); Coolelf Eco BS, an environmentally conscious coolant without nitrates, amines, borax or phosphates; and an automated grease dispenser called Greasymat.
Will the upstream concession granted to Total by Abu Dhabi have any tangible benefit for its downstream business? Its unclear but analysts say that Total Marketing Middle East is well placed to manage the increasing challenges of the lubricants sector. According to Stefan Mueller, senior principal analyst at IHS Chemical, Totals ability to sustain innovation bodes well in the region. I dont see any challenges for Total as they have operated a long time in the Gulf region and have a broad portfolio of lubricants backed by research and analytical labs.