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February 2, 2016

Volume 7 Issue 3

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PetroChina Ties Up with FAW

PetroChina announced an agreement with automaker FAW Group for the supply and joint development of automotive lubricants. The deal calls for the companies to jointly establish a research and development center.

State-owned PetroChina is one of China’s two largest oil companies, while FAW is one of the nation’s largest manufacturers of cars and trucks. The companies will use research and development centers that PetroChina subsidiary Kunlun Lubricants operates in Dailian, Liaoning province, and Lan Zhou city, of Gansu province.

“[In the future] the two companies will set up a joint laboratory to strengthen R&D to develop other lube oil products, and to put forward feasible oil specifications for domestic automobiles,” PetroChina said in a press release.

The agreement calls for the companies to cooperate in development of lubes for FAW’s full line of vehicle models. PetroChina will also use its nationwide marketing network of more than 20,000 fuel stations to provide products and services in the automobile after-sales market for FAW subordinate companies.

Kunlun lubricant brands include the Tianrun, Tianlai, Tianxie, Tianwei, Tianhong, Tianli and Tiansheng series for cars, motorcycles and diesel-powered trucks. The company reported lubricant sales volumes of 1.5 million metric tons in 2014, including 880,000 tons of premium products. PetroChina said it enhanced the marketing of its Tianrun premium products, with new packages and multiple variants with different anti-abrasion characteristics catered to different markets and vehicles.

Kline & Co. consultants predicted last month that passenger car sales will continue rising through 2019 – partly due to government efforts to foster a consumption-led economy – and that this will benefit automotive lube marketers.

“The consumer segment favors longer oil drain intervals, and the use of synthetic and semi-synthetics will become increasingly popular within the segment over the next five years,” said Kline.

FAW, China’s oldest and largest automotive group, reported sales of 2.8 million vehicles in 2015. The company has joint ventures with Volkswagen and Toyota. FAW Car, a subsidiary of the FAW Group, sold 235,000 vehicles last year. Its Besturn brand sold 149,000 units and Hongqi, China's first home-grown luxury brand, sold more than 5,000 units.