Shell buys 75-per cent stake in Chinese lubricant producer

Sep 22, 2006, 17:48 GMT

London - Anglo-Dutch oil giant Royal Dutch Shell has acquired a 75 per cent stake in Tongyi, China's second-largest lubricating oil producer, the company said Friday.

The move will give Shell a secure foothold in China, the world's fastest-growing consumer market for lubricants.

Tongyi, With an annual production of six billion litres and a network of 2,000 distributors and 90,000 retailers, sells lubricants for cars, motorcycles, trucks and industrial customers.

The 75-per cent stake in China's leading independent brand will increase Shell's finished lubricants volume by 8 per cent and give it the third largest share of a market expected to grow by 10 per cent a year at least until 2010.

David Pirret, Shell executive for lubricants, said: 'Shell is the world's leading lubricants brand. Growing our business in such an important market is critical to extending that leadership.'

He added the deal would enable Shell to realise savings in the manufacture of lubricants and procurement of base oils, additives and other materials.

Under the joint venture agreement, Tongyi's brands and product lines will be marketed separately from those of Shell. Tongyi, which started 13 years ago, has three oil lube blending plants in China with a total capacity of around 600,000 tonnes.