The global market for lubricating oil and grease has been on the road to recovery following the global financial crisis, with players in the UAE seeing new developments and partnerships. It is projected to reach 11.9 billion gallons by 2018, primarily driven by growing consumption in developing countries and strong demand for synthetic and biodegradable lubricants, according to a new report by Global Industry Analysts (GIA).
In the UAE, after the crisis, many players stopped their investment programmes and there were almost no openings of new service centres or facilities in 2010 and 2011, says Philippe Cabus, Managing Director, Total Marketing Middle East. “The automotive lubricant business suffered during the post-crisis period in the UAE, but is recovering. On the one hand, oil consumption of cars was doing quite well, thanks to the large park of vehicles in the UAE. But on the other hand, the oil consumption of heavy- duty and civil works equipment drastically fell due to lack of projects,” he says.
This year, a few active players have opened or restructured service centres. This benefits car manufacturers and players who can offer good services (oil change, car wash, tyre repair) at a reasonable price through a network of car centres.
GIA analysts say that globally the growth in the lubricant business has been triggered by recovery in GDP growth in economies worldwide, increase in demand for commodities and subsequent rise in industrial production, manufacturing activity, purchase of new industrial machinery and rising motor vehicle ownership.
Earlier this year, the Ras Al Khaimah Government and Hinduja Group’s Gulf Oil International commissioned Gulf Rak Oil, a state-of-the-art lubricant manufacturing plant and grease processing facility in Rak Maritime City.
In a media statement issued at the launch, Frank Rutten, Vice-President International of Gulf Rak Oil, said an ambitious expansion plan had already been charted out for the plant to ensure a market share of at least 6-8 per cent in the next four years. This is expected to reflect in the rolling plan with existing and new customers.
Gulf Oil International chose the Ras Al Khaimah site based on its proximity to Saqr Port and its location on the Arabian Gulf, which will support direct docking of base oil ships, Rutten told the trade magazine Lube Report. The plant has been designed with easy and cost-effective modular expansion in mind, for potential growth of up to four times its current size, he said.
A new plant in Dubai also began operations this year. Mag Lubricants, a subsidiary of Moafaq Al Gaddah Group or Mag Group, the UAE-based corporation, opened a state-of-the-art $50-million (about Dh183 million) lubricant blending facility in Jebel Ali in June. With a product turnout of automotive oil for petrol and diesel engines as well as industrial gear oil, hydraulic oil and a lithium and calcium complex grease, the plant will cater to the international market.
Mag’s global plans call for a doubling of its international workforce in tandem with an expansion into key new markets with the eventual aim of operating in 50 countries globally. “We are well placed to move into new untapped markets given our strong domestic presence in the UAE. International growth is the best way to take Mag Lubricants to a new level in terms of our stature and overall development. We are all very proud of the new blending facility in Dubai’s Technopark that will be the flagship for our business for the next 25 years but we’re equally focused on global progression as well,” CEO Mahmoud Al Theraawi told Lube Report. “Our immediate trading markets are of course the Middle East along with North and South Africa. We already have links with Vietnam and the Philippines and now its time to develop new partnerships and customers in new areas.”
Last month, the Emirates News Agency WAM reported that the Emirates General Petroleum Corporation (Emarat) met with officials from ExxonMobil to discuss long-term cooperation in the oil and lube sector. Abdulrahman Qasim Al Ali, Commercial Sales Manager, said that Emarat’s exports of vehicle lube oil have witnessed significant growth in recent years, with products now being distributed in numerous countries in the Gulf, the Middle East, the states of the Russian Federation, China and the Indian peninsula.
Such partnerships are crucial to helping the industry. Tie-ups with automobile manufacturers to make specific oils, grease and lubricants are equally important to propel growth in the business. “The costs and expertise in research and developement to develop new engines and post-treatment solutions are huge, but they are a necessity for car manufacturers. Thanks to their know-how and research centres, oil companies can help car manufacturers to develop the best products, which will comply with the most severe technological requirements and environmental norms,” says Cabus.
As with other industries, technology will continue to play an important role in the lubricant industry too, especially when it comes to sustainable oil to minimise pollution and maximise resource utilisation. Growing environmental concerns pertaining to toxicity, biodegradability, bioaccumulation and recyclability are helping drive demand for biodegradable and synthetic lubricating oil and grease. In the UAE as well, many oil companies will be bringing in their latest biolubricants with biodegradable properties as the demand grows. At the 10th Middle East Base Oils and Lubricants Conference in Dubai last month, Mohammed Al Sadek, Director, Enoc Lubricants Marketing, said: “We are committed to developing products that meet changing industry needs. In achieving this, our Lubricants and Grease Manufacturing Plant (Elomp) facility in Fujairah plays a key role, researching and blending high-quality products.”
The industry is upbeat about its future prospects. “What is amazing when you live in the UAE is that you understand that the limits exist to be overtaken. The dynamics of lubricants supply and demand are reshaping. Sophisticated markets such as the UAE offer growing opportunities for higher-performance engine oils, thereby offering exciting perspectives to lubricant product blenders and marketers such as Total,” says Cabus.
— With input from the GN Focus team