Jebsen launches $40m lube oil facility

Jebsen Group, China's largest Porsche sports car dealer, has put a new $40 million lubricating oil plant into operation in Guangdong province, to tap into the country's growing demand for the products.

The Zhuhai factory was built jointly by Jebsen Group and refining company Clean Oil Investment Ltd, which holds a controlling stake in the venture.

The whole facility includes a 16,000-ton base oil refining plant, and a 35,000-ton lubricating oil blending plant.

Base oils are lubricant-grade oils produced either through crude oil refining (mineral base oil) or manufactured by chemical synthesis.

Hans Michael Jebsen, the Jebsen Group chairman, said despite being affected by falling oil prices, the Chinese market for refined base oils and grease is still growing, as China works to make better use of waste oil products.

"The price for normal base oil is declining and will keep falling in the short term, but what we produce here is what's called 'Group II/II+ base oil' - a high-end product that requires advanced refinery technologies, and the declining crude market doesn't have a direct impact on that," he said.

Jebsen said his company has the edge over rivals in terms of its distribution network for automotive and industrial products, which helps support new business and meet the growing demand for recycled lubricants.

Currently, China recycles and reuses just 6-8 percent of its annual lubricant consumption of around 8 million tons, providing huge business opportunities in the sector.

Antony Louis Marden, the owner of Clean Oil Investment, said that small portion is likely to increase as a growing number of private-car drivers continue to use more such oils, and subsequently generate more lubricants for recycling.

"There are no worries about enough raw materials being available to sustain our growth, because we have a solid used-oil supply," he said, adding about 70 tons of used oil was generated in Guangdong province alone last year.

China's lubricant production areas are mainly concentrated in eastern, northeastern and southern areas of China with Liaoning, Shandong, and Guangdong provinces and Shanghai ranking top by output.

Despite the economic slowdown, China is still the world's largest lubricant market, accounting for 44 percent of the Asian market.

The sector is still dominated, however, by large international companies including Royal Dutch Shell Plc and Exxon Mobil Corp.