Shell further invests in Chinese lubricants supply chain

Tianjin, 16 August 2012: Shell announced today its plan to build a new, state-of-the-art lubricants blending plant in Tianjin, China. The plant will be ideally located to supply a range of lubricants products to Northern China, supplementing Shell’s six existing plants on the Chinese mainland. The plant will have a capacity of 300 million litres per year initially, with the potential to expand to 500 million litres.

Official groundbreaking took place today at the new site at Nangang, Tianjin. Mark Gainsborough, Executive Vice President Shell Global Commercial, said: “We are delighted to confirm this significant new investment in our supply chain in China, which is the fastest growing lubricants market globally. Supply chain is the foundation for the consistent delivery of our high quality lubricants products such as Shell Helix, Shell Advance, Shell Rimula, Shell Tellus and Shell Omala. We are well positioned to meet the future needs of lubricants customers in Asia, to sustain our leading market position, and to realise our growth plans.”

Shell became the leading international energy company in China’s lubricants market in 2006 when it acquired Tongyi that produces and markets China’s leading independent lubricant brand Monarch. Shell has built blending plants in Tianjin, Zhapu (Zhejiang) and Zhuhai (Guangdong). With a strong heritage of innovation and customer collaboration, it has also established a specialist lubricants technology service centre at the Zhuhai site, and recently announced a technology centre in Shanghai to be opened in 2013.

As well as this leadership in supply chain and product technology, Shell has strong lubricants brands and is number one in brand preference with motorists in Asia (Source: independent research). Shell is the largest international lubricants supplier in Asia by sales volumes (Source: Kline & Company). Gainsborough further stated: “Success in the lubricants business is about being close to the customer and offering the right products and services in the right places. Shell’s new investments in the supply chain, innovation and brand are what this is all about.”

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Notes to editors

• The Asia Pacific region is driving global growth in lubricants demand. By 2020 it is estimated the region will represent more than 50% of all demand.
• Almost 50% of that growth is expected come from China. That means that by 2015, when the new Shell Tianjin blending plant starts up, China is expected to overtake the US as the largest market for lubricants.
• Lubricants growth in China is expected to come from all market segments. Consumer demand will be driven by the number of Chinese vehicles, which is expected to triple in the next 10 years to just over half a billion. Industry demand will be lead by the infrastructure related sectors (mining, construction, steel). A fifth of all construction projects globally are soon expected to be in China.
• This new lubricants plant brings Shell’s total in China’s mainland to seven, supplying a range of consumer, transport, industrial and marine lubricants. Shell also has blending plants in Hong Kong and Taiwan. Shell also established one of its three global storage hubs for Pearl Gas-To-Liquid Base Oils in Hong Kong, strategically chosen to serve the adjacent blending plants.
• In Asia, Shell also has lubricants blending plants in Singapore, Thailand, Malaysia, the Philippines, Vietnam, South Korea, Pakistan and India.
• In addition, three of Shell’s eight global base oil manufacturing plants are in Asia: Pulau Bukom in Singapore; Kaosiung in Taiwan and Yokkaichi in Japan. In early 2012, Shell signed a conditional Joint Venture agreement with Hyundai Oil Bank to develop, construct and operate a base oil manufacturing plant at the Daesan Refinery in South Korea.
• This new Tianjin blending plant will use state- of–the-art production techniques. It will apply ‘lean’ production concepts to produce a wide range of quality lubricants. A ‘push production’ model will be applied to ensure that product is delivered to distribution warehouses and on to Shell’s customers quickly and efficiently. Automated packaging equipment will accurately fill the full range of products into various pack sizes to suit customer preferences. The plant will be designed to meet high environmental standards including measures to reduce waste and carefully control waste disposal to ensure no harm to the environment.
• The new plant will adopt similar technology and levels of automation at the existing and recently expanded plant, also located in Tianjin. The two plants will complement each other, providing a full range of lubricants serving Shell customers in North China.

About Shell Lubricants

The term “Shell Lubricants” collectively refers to Shell Group companies engaged in the lubricants business. Shell sells a wide variety of lubricants to meet customer needs across a range of applications. These include consumer motoring, heavy-duty transport, mining, power generation and general engineering. Shell’s portfolio of lubricant brands includes Pennzoil, Quaker State, Shell Helix, Shell Rotella, Shell Tellus and Shell Rimula. We are active across the full lubricant supply chain. We manufacture base oils in eight plants, blend base oils with additives to make lubricants in over 50 plants, distribute, market and sell lubricants in over 100 countries.

We also provide technical and business support to customers. We offer lubricant-related services in addition to our product range. These include: Shell LubeMatch - the market leading product on-line recommendation tool, Shell LubeAdvisor - helps customers to select the right lubricant through highly trained Shell technical staff as well as online tools, and Shell LubeAnalyst - an early warning system that enables customers to monitor the condition of their equipment and lubricant, helping to save money on maintenance and avoid potential lost business through equipment failure.

Shell’s world-class technology works to deliver value to our customers. Innovation, product application and technical collaboration are at the heart of Shell lubricants. We have leading lubricants research centres in Germany, Japan (in a joint venture with Showa Shell), the UK and the USA. We invest significantly in technology and work closely with our customers to develop innovative lubricants. We have a patent portfolio with 150 + patent series for lubricants, base oils and greases; more than 200 scientists and lubricants engineers dedicated to lubricants research and development.

Customer benefits include lower maintenance costs, longer equipment life and reduced energy consumption. One of the ways we push the boundaries of lubricant technology is by working closely with top motor racing teams such as Scuderia Ferrari. These technical partnerships enable us to expand our knowledge of lubrication science and transfer cutting-edge technology from the racetrack to our commercial products.

Cautionary note

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