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This is Money: Shell buys into Chinese lubricants firm

22 September 2006

Energy giant Royal Dutch Shell secured third spot in the world’s fastest growing consumer market for lubricating oils today.

Shell bolstered its position in China by acquiring 75% of Tongyi, which sells lubricants for cars, motorcycles, trucks and industrial customers through a network of 2,000 distributors and 90,000 retailers.

The move for China’s leading independent brand will increase Shell’s finished lubricants volume by 8% and give it the third largest share of a market expected to grow by 10% a year at least until 2010.

David Pirret, Shell executive for lubricants, said: ‘Shell is the world’s leading lubricants brand. Growing our business in such an important market is critical to extending that leadership.’

He added the deal would enable Shell to realise savings in the manufacture of lubricants and procurement of base oils, additives and other materials.

Under the joint venture agreement, Tongyi’s brands and product lines will be marketed separately from those of Shell. Tongyi, which started 13 years ago, has three oil lube blending plants in China with a total capacity of around 600,000 tonnes.

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