BIZCHINA / Overseas Investment
Shell buys lubricants firm Tongyi
(China Daily)
Updated: 2006-09-25 16:43
Oil giant Royal Dutch Shell has bought a 75-per-cent 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 per cent, giving it approximately 16 per cent 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 per cent 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.
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