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October 10, 2017

Volume 7 Issue 8

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CNPC Aims Big in Additives

BEIJING – CNPC has began supplying a variety of lubricants-related products, including lube additives, in a bid to gain new clients and fight for market share.

“CNPC is not going to sell oils only,” Zhai Yuekui, vice general manager of CNPC’s newly established additives unit, told Lube Report Asia at a Sept. 21 press conference here. “We aim to be a technology solution provider that covers oils, additives, greases and car-care products.” The press conference was part of the 18th China International Lubricants and Technology Exhibition, known as Inter Lubric. 

The state-owned oil giant has been producing lubricant additives for over 50 years, but had only been using its output internally until last month. CNPC introduced a range of Kunlun-branded additives – including 10 single components and 40 packages – for motor oils, marine oils and industrial oils. All additives offered on the market were developed recently at its labs in Dalian, Liaoning province, and Lanzhou, Gansu province. 

Zhai said the firm’s additives unit has two urgent missions. First, it will strengthen partnerships with private Chinese additives producers to improve components’ quality and add more varieties. Then, it will have to learn from multinationals the best practices in marketing and commercialization. 

“We might be a latecomer in the additives market, but we have been sharpening our technologies for decades,” Zhai said. “We are confident that our technologies are competitive enough to rival multinationals and the establishment of the additives unit means we are ready to face any challenges. Kunlun intends to be the top additives supplier in China and eventually in the global market.” 

Given how competitive the market is, some may consider that goal overly optimistic. Aside from the multinationals that dominate the market, a handful of private Chinese producers, such as Sino Ruifeng in Xinxiang, Henan province, and Kangtai Lubricant Additives in Jinzhou, Liaoning province, are performing well and gaining market share. 

CNPC also recently rolled out greases onto the market, introducing at the meeting two greases developed for robotics applications such as RV gearboxes and harmonic drive gears. 

Its RV00 product underwent a year of tests overseen by Siasun Robot & Automation Co., a state-owned robot manufacturer in Shenyang, Liaoning province. Its DG2 grease met a Chinese-made harmonic drive gear maker’s key performance parameters in anti-friction, low noise and stability tests. 

“The tests proved that the two greases have the same quality of those of our multinational rivals, meaning it’s time for Chinese robot manufacturers to replace imported greases with Chinese-made greases,” Feng Legang, head of the grease unit, said at the press meeting. 

Feng said CNPC’s Kunlun greases now hold nearly 10 percent of the market, or 35,000 metric tons per year – a leap from less than 3 percent in 2008. “As China’s manufacturing sector moves towards ‘green,’ value-added and high-tech, high-quality products, greases like Kulun will see great opportunities to grow,” Feng said. 

Like many other state-owned companies, CNPC will also benefit greatly from China’s One Belt and One Road Initiative, which aims to connect China to more trade routes in developing countries in Central Asia, Southeast Asia and Africa through infrastructure projects. “Kunlun lubes and greases will go hand in hand with Chinese machinery makers to help modernize the countries,” Feng said. 

Some of China’s other state-owned oil companies have also recently altered their strategies in a bid for more market share. For example, to increase the brand awareness, Sinopec will no longer trade base oils using identifiers like the location of the facility where they were produced, such as Maoming or Yanshan. Instead, all of its base oils will be sold under the Sinopec brand. The company will also continue to use its operation in Singapore to sell Sinopec-branded base oils to clients globally. “We hope such a change will increase our brand influence in the global market,” said Zeng Haiying, general manager of Sinopec’s base oil unit, at a base oil summit held in September in Xiamen, Fujian province. 

The strategies will help the companies compete with a pool of multinationals that have been continuously growing in China throughout the past decade, Kong Jingyuan, a director at CNPC’s PetroChina Planning & Engineering Institute, said at the event in Xiamen. 

“Sinopec and CNPC’s combined market share in the lube sector, for example, fell to less than 40 percent in 2016 from 53 percent in 2001,” Kong said, contending that, in contrast, multinationals alone might hold as much as around 30 percent of the market. It’s time for [Chinese national oil companies] to review our strategies and make new plans.”

State-owned CNPC (China National Petroleum Corp.) is the largest integrated energy company in China. It is the parent of PetroChina Co., which is headqaurtered in Beijing and listed on the Shanghai Stock Exchange.