| Shell pips PetroChina to own China's leading lubricant company |
SHANGHAI, Sept. 23 -- Royal Dutch Shell Plc has outbid PetroChina Co to acquire a controlling stake in China's leading independent lubricant company, making it the third largest player in the Chinese market.
Shell said yesterday its Chinese unit had bought a 75 percent stake in Beijing Tongyi Petroleum Chemical Co and its affiliate Xianyang Tongyi Petroleum Chemical Co. It didn't say how much it had paid in the deal.
"China is the fastest growing consumer lubricants market in the world, forecast to grow annually by 10 percent at least until 2010," said David Pirret, executive vice president of Shell's lubricants unit.
Currently, the lubricant demand is 6 billion liters a year in China.
The acquisition will help Shell quadruple its lubricant capacity in China, behind only domestic state giants China Petroleum & Chemical Corp and PetroChina. PetroChina has also bid for the Tongyi stake.
Tongyi operates three lubricant oil blending plants in China with a combined annual production capacity of 600,000 tons. Shell has a capacity of 200,000 tons in the country.
After the deal with oil giant Shell, the Chinese firm will be able to cut bills for base oil, used in lubricants production. Currently, it imports 90 percent of feedstock.
The purchase will also increase Shell's global finished lubricants volume by 8 percent, giving it a market share of around 16 percent, the Anglo-Dutch company said.
ExxonMobil Corp has overtaken Shell as the world's largest lubricant firm with a 12 percent market share.
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