JX Nippon Oil, Idemitsu boosting overseas lube business

JX Nippon Oil & Energy Corp., which controls 40% of the Japanese oil market, and Idemitsu Kosan Co., whose share is just over 20%, are both increasing their production capacity and broadening their sales networks to fulfill their plans to expand their overseas operations in lubricating oils. The lubricants are used mostly for automobile engines and machinery drive mechanisms, which can find a healthy market in Asia. The two companies are intent on expanding their operations abroad to compensate for the weak domestic demand.
 
Both JX Nippon Oil and Idemitsu plan to increase their foreign production capacity for lubricating oils to around 420,000 kiloliters (kl) a year in 2015. JX Nippon plans to increase the production capacities in two of its three subsidiaries in China: at the Guangzhou unit, capacity will be raised to more than 80% to 66,000 kl in 2013; while capacity will be doubled in 2014 at the Tianjin unit.
 
JX Nippon Oil is forming a joint venture with a local manufacturer in Thailand to put up a 30,000 kl facility scheduled to be operational by 2014. This will supply the base oil that Thai state-owned PTT PCL has agreed to buy from JX Nippon. Likewise in India, JX Nippon Oil plans to set up a sales company under a joint venture with a local firm in 2013. The company’s goal is to raise the ratio of foreign sales to total sales by 30% from the current 20% plus, by increasing total volume of lubricants sales in overseas markets by 59% from current levels to 700,000 kl in fiscal 2015.
Idemitsu, on the other hand, plans to double production capacity at its China subsidiary in Tianjin to more than 110,000 kl a year by the end of 2013. Its U.S. subsidiary is increasing production capacity by 50% to 100,000 kl and Idemitsu plans to expand sales opportunities there through outlets such as auto parts wholesalers. Idemitsu’s goal is to boost foreign lubricants sales by 76% to 650,000 kl in fiscal 2015, and increase the ratio of foreign sales from the current figure of slightly below 40% to 50%. (October 6, 2012)