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August 21, 2019

Volume 3 Issue 4

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Shell, CISA Form JV for Mexico’s Lube Market

Shell Lubricants and Comercial Importadora, S. de R.L. de C.V. – known as CISA – recently announced a new joint venture partnership in Mexico that includes investments in existing facilities, increased lubricant production capacity, new marketing capabilities and local workforce training and development.

The joint venture will operate under the name CS, Juntos Shell y Quaker State Mexico and will be the sole licensee, producer and marketer of Pennzoil-Quaker State Co. products and other Shell Lubricant brands in Mexico.

According to an English-language news release issued by Shell yesterday, the new joint venture will strengthen CS’s leading position in automotive lubricants in Mexico by investing in the expansion of its Naucalpan lubricants plant and increasing production capacity. Although the announcement did not disclose details, reports by multiple Mexican news outlets in early August said the investment in the Naucalpan plant would range from $4 million to $7 million per year over the next five years – totaling between $20 million and $35 million over that time – to expand the plant’s annual blending production capacity by about 50 percent from its current capacity of about 108,000 metric tons. Naucalpan is a city and municipality just northwest of Mexico City.

CISA Director Mauricio Esponda said the joint venture would be beneficial for Mexico’s lubricants market. “Customers will now have better nationwide access to the highest quality products with market leading technology,” Esponda said. “They will benefit from the experience of both companies and will receive better and more personalized customer service.” CISA is owned by the Flores family.

“The goal of our new joint venture is to capture market growth in one of the world’s top lubricants markets, and we will achieve that by combining our world class products, technology and supply chains with CISA’s market expertise and close connection with Mexican consumers,” Carlos Maurer, CEO of Pennzoil Quaker State Co. and vice president of Shell Lubricants Americas, said in a Shell news release.

Shell has operated in Mexico since 1954, when it began marketing lubricants and petrochemicals there. The company announced in 2017 plans to invest $1 billion over 10 years in Mexico, channeled to its retail network, fuel logistics infrastructure and business partnerships, contingent on market conditions. Shell said the CS joint venture builds on those announced plans and reflects the priority Mexico has within Shell’s growth strategy.

“As the leading lubricant supplier in the world for 12 consecutive years, Shell hopes to strengthen its global market share by improving access to one of the top 10 global lubricants markets, which is also the fastest growing in the Americas region,” the company stated.

The Mexican lubricants market had total volume of about 839,000 metric tons in 2018, Raloy Lubricants CEO Jorge Loya said at the ICIS Pan American Base Oils & Lubricants Conference in November 2018, citing data from RRG Consultoria. The main applications segment is automotive, with passenger car motor oils and heavy-duty diesel motor oils holding 49 percent and 23 percent of market volume, respectively.

Mexico’s lubricants market has more than 150 brands from both oil majors and local companies. The combined market share for companies such as ExxonMobil, Shell, Mexicana de Lubricantes, Raloy, Chevron, Lubral and Bardahl was 82 percent in 2018, with the remaining 18 percent made up of smaller blenders, according to Raloy Lubricantes’ internal research. Repsol announced in July 2018 an agreement to acquire 40 percent of lubricant distributor Bardahl de Mexico, which will enable the Spanish energy company to manufacture and sell its own lubricants in Mexico.

According to a 2018 webinar by consultancy Kline & Co., ExxonMobil ranked as the largest lubricant supplier in Mexico in 2017, with Shell following closely behind and Mexlub in third place.