Lubes News - Bulletin 107 (Nov 09)

The biggest Asian refining deal is struck, a Bahrain bank gives base oil $120m boost, ups and downs for BASF, China's Sinopec revealed its global ambitions for the lubricants market, Greece lubricants down but grease is good for the bottom line.

A merger deal which could challenge the major global lubes producers has been signed between Nippon Oil and Nippon Mining.  The resulting company, JX Holdings, which is worth Y1,030bn ($11.3bn will begin operations in April 2010.  Nippon Oil is already Japan's largest oil refiner, and the new company will feature in the top 10 private oil companies in the world, but faces the challenge of ensuring profitability.

Bahrain's Oil and Gas Holding Company (NOGAHolding) and Ahli United Bank BSC have signed a $120m deal to finance the National Oil and Gas Authority's stake in a new $430m lubricant base oil plant being build in the Kingdom.

The loan arrangement will allow NOGA to take a 27.5% share in the plant alongside BAPCO and Finland's Neste Oil, with the operation set to manufacture superior Grade III group lubricant base oils.

Chemical plantImage: US National Archives

In the chemical sector, BASF clearly stated their ambitions for Asia Pacific growth to 2020,  but also announced the closure of their Belgian Maleic Anhydride (MA) plant in Belgium.  The Feluy plant employs around 130 people, producing MA which is used in lube oil additives in gasoline and diesel engine crankcase oils as dispersants and corrosion inhibitors.  BASF blamed overcapacity and the economic downturn for the closure but were quickly forced to declare a force majeure when the workforce went on strike in response to the announcement.

Meanwhile China, Sinopec held its first global lubricant's distributors' conference, attended by 100 partners from 30 countries.  The organisation announced Project "Golden Triangle" which is aimed at embedding Sinopec as a global lubricants force using a three-phase strategy: open up the market in the Asia-Pacific region; establish overseas plants; and finally set up global marketing and service networks.  Sinopec is China's leading lubricants brand and the largest domestic supplier of OEM automotive lubricants.

There was less positive news for the Greek fuel and lubricants business which showed significant losses of €2.5m ($3.7m) in 2008 from €100.2m the previous year according to a survey.  The loss came despite an increase in the number of fuel retail outlets.

And finally, grease can be good for the bottom line providing you choose your supplier carefully, according to Paul Converso, marketing vice president of New York's Battenfeld Grease & Oil Corp.  In a speech to the Independent Lubricant Manufacturers Association's annual meeting, as reported by Lube Report's Nancy DeMarco, Converso stated that grease was a profitable associated sale with minimal market entry costs.  However, he warned Association members to closely examine suppliers' sales and marketing policies regarding sales directly to the end-user.  He saw the US grease market continuing to decline, but an obvious increase in demand from China, India and South East Asia with synthetics driving the product ranges.