(EnergyAsia, August 23 2012, Thursday) — European major Shell said it is building its seventh lubricants blending plant in Nangang in the northern Chinese city of Tianjin.

Due to start up in 2015 with an annual production capacity of 300 million litres, the plant can be expanded to 500 million litres at a later stage. It will add to the company’s existing blending plants in Tianjin, Zhapu in Zhejiang province and Zhuhai in Guangdong province.

The Anglo-Dutch major said it became the leader in China’s lubricants market in 2006 after acquiring a local company, Tongyi, which produces and markets the country’s leading independent lubricant brand, Monarch.

Shell followed that up by establishing a specialist lubricants technology service centre in Zhuhai city, and is on course to open a technology centre in Shanghai next year. 

“We are delighted to confirm this significant new investment in our supply chain in China, which is the fastest growing lubricants market globally. Supply chain is the foundation for the consistent delivery of our high quality lubricants products such as Shell Helix, Shell Advance, Shell Rimula, Shell Tellus and Shell Omala,” said Mark Gainsborough, Shell Global Commercial’s Executive Vice President.

According to Shell, the Asia Pacific region could represent more than 50% of global lubricants demand by 2020.

The company said: “Almost 50% of that growth is expected come from China. By 2015, when the new Shell Tianjin blending plant starts up, China is expected to overtake the US as the largest market for lubricants.

“Lubricants growth in China is expected to come from all market segments.  Consumer demand will be driven by the number of Chinese vehicles, which is expected to triple in the next 10 years to just over half a billion.

“Industry demand will be lead by the infrastructure related sectors (mining, construction, steel).  A fifth of all construction projects globally are soon expected to be in China.”

The new plant will be Shell’s seventh in mainland China, supplying a range of consumer, transport, industrial and marine lubricants. Shell also has blending plants in Hong Kong and Taiwan. Shell also established one of its three global storage hubs for Pearl Gas-To-Liquid Base Oils in Hong Kong, strategically chosen to serve the adjacent blending plants.

In Asia, Shell owns and operates lubricants blending plants in Singapore, Thailand, Malaysia, the Philippines, Vietnam, South Korea, Pakistan and India.

Three of its eight global base oil manufacturing plants are in Asia: Pulau Bukom in Singapore; Kaosiung in Taiwan and Yokkaichi in Japan.

In early 2012, Shell signed a conditional agreement with Hyundai Oil Bank to jointly develop, construct and operate a base oil manufacturing plant at the Daesan oil refinery in South Korea.