Oil giant Royal Dutch Shell has bought a 75-percent stake in
China's largest privately owned lubricant oil company Tongyi,
making it the third-largest in China's lubricants market, the firm
said on Friday.
"The transaction will increase Shell's global finished
lubricants volume by 8 percent, giving it approximately 16 percent
of the global branded finished lubricants market," the company said
in a statement, without giving the financial details of the
deal.
"China is the fastest-growing consumer lubricants market in the
world, which is to grow annually by 10 percent at least until
2010," said David Pirret, executive vice-president of lubricants at
Shell. "Growing our business in such an important market is
critical to extending our leadership in the world market."
"It is also in line with Shell's strategy of profitable
downstream through leveraging our portfolio in high-growth
markets."
Shell said its lubricants business in China has experienced
strong growth over the past few years. It has three lube oil
blending plants in China with a total capacity of about 200,000
tons per year.
Tongyi has grown rapidly in 13 years to become China's
third-largest lubricants company. It has a network of 2,000
distributors and 90,000 retailers across China and has three lube
oil blending plants with a total annual capacity of 600,000
tons.
Commenting on the deal, Lim Haw-Kuang, executive chairman of
Shell China, said: "Taking a major stake in a successful Chinese
company is a clear demonstration of Shell's ability to deliver on
its strategic growth aspirations in the east and positions us as
one of the leading international energy companies operating in
China today."
This year the Dutch company plans to invest US$500 million in
both the upstream and downstream sectors of oil production to
increase its presence in the competitive Chinese energy market.
Lim said Shell would spend the money on everything from oil and
gas exploitation to downstream refining and oil retailing.
The company plans to add more than 200 retail sites in east
China's Jiangsu Province through its joint venture with Sinopec
over the next six months. Shell has an agreement with Sinopec to
build 500 sites in Jiangsu. Of those, 200 have been
established.
In its upstream business, Shell is working with PetroChina to
develop the Changbei gas field in northwest China's Shaanxi
Province. The project is expected to supply gas to Beijing and
Tianjin municipalities, and Hebei and Shandong provinces before
2008.
(China Daily September 23, 2006)