Petronas revs up lubricant ambitions

Alliances with OEMs like Group Lotus can help Petronas achieve its global target as well as become the number one lubricant company in Malaysia

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Turin (Italy): Petroliam Nasional Bhd (Petronas) will soon unveil a strategic tie-up with a British sports-car maker as it ramps up its lubricants and other fluid business to become one of the world's top five players by 2016. Petronas also has approved a 50 million (RM209 million) budget to set up a new research and development centre at its lubricant manufacturing facility here in Italy. The centre is expected to be ready by 2015 and will be one of Europe's largest, if not the biggest. Petronas has roped in Group Lotus as its latest original equipment manufacturer (OEM) partner, expanding the portfolio that already boasts of the likes of Germany's Mercedes Benz, Italy's Fiat Automobiles Group, US' Chrysler and New Holland, the world's largest manufacturer of agricultural equipment. The alliance will be revealed at the Frankfurt Motor Show in Germany this week, according to senior executives of two Petronas subsidiaries that lead the national oil company's charge in the lubricant business. Alliances with OEMs like Group Lotus can help Petronas achieve its global target as well as become the number one lubricant company in Malaysia, executives of Petronas Dagangan Bhd (PDB) and Petronas Lubricants International (PLI) said. Petronas is just outside the world's top 10 in the segment, and is the second largest player in Malaysia, which consumes 250 million litres of lubricant a year. PDB senior general manager of retail business, Izuddin Husaini Mohd Yusoff said OEMs are very central to Petronas' lubricants business as they offer greater access to the lucrative after-sales market. "We want to be a top notch lubricant giant," Izuddin said, adding that the acquisition of FL Selenia of Italy had paved the way for Petronas to be big in the global lubricant scene. Petronas paid some 1 billion (RM4.17 billion) to buy Selenia in 2008, which was later consolidated into PLI. "OEMs are the driver of new technology in the (lubricant) market," PLI chief executive officer Aldino Bellazzini told Malaysian reporters during a visit to PLI's production and research and development centre here last week. Bellazzini said Petronas will supply all the lubricants and fluid needs of Lotus, which is owned by Proton Holdings Bhd, under the partnership. It will also support Lotus in the latter's motorsport activities except for Formula 1. He said although Lotus has a small production volume, such partnership is vital to help Petronas make more inroads in the after-sales market of premium brands. According to Parsippany, NJ-based consulting firm Kline and Co, the present top five global lubricant marketers by market share are Shell, ExxonMobil, BP, Chevron and Total. PDB lubricant business division general manager, Mohd Shobri A. Bakar said lubricant growth in Asia should be exponential in the coming years, with China and India being good markets for Petronas to go into. Big growth is also expected in South America. "Growth in Asia is going to be very good. China and India are good markets to go in. For international business, the focus will be on the growth in Asia and South America as well as some parts of North America." Petronas markets its lubricants under various brands including Syntium, Syntium Moto and Urania. It exports to European countries as well as China, India, Thailand, Indonesia and Sudan, among others. Petronas is ranked among Fortune Global 500's largest corporations in the world.