THE first lubricants to be produced outside China by that country's top oil refiner, Sinopec, will be made in Singapore, the company announced yesterday. And starting with contract manufacture here of its marine and automotive lubricants by two Singapore companies, Sinopec is considering a direct manufacturing presence here next, a company executive told BT. 'We will focus on developing the market first,' Liu Qinghua, vice-chief engineer of Sinopec Lubricant Company, said.

　　Its automotive lubricants are to be made in Singapore by Italsing, a joint venture of Singapore Petroleum Company and ENI International, while marine lubricants are to be made by AP Oil. Moving on from contract manufacture, 'one of the options is for Sinopec to set up a plant here', Mr Liu said.

　　He was speaking to BT ahead of Sinopec's launch yesterday of its Singapore-made lubricants for the Asia-Pacific market.

　　Mr Liu declined to specify the value of the contract manufacturing deals with the two Singapore companies, saying only that Sinopec will initially produce 5,000-7,000 tonnes of lubricants here annually.

　　This is on top of about 10,000 tonnes which it sources from the oil majors here like Shell and ExxonMobil.

　　Separately, AP Oil said in a Singapore Exchange (SGX) statement that its five-year contract with Sinopec to blend mainly marine lubricants will be done at its two plants here.

　　The volume may vary according to Sinopec's requirements, it said, and it was unable to give a contract value at this time. The output is bound to be comparatively small, but it could grow. Sinopec already produces 1.4 million tonnes of lubricants in China.

　　Mr Liu said that Sinopec could also consider some of Singapore's neighbours as sites for future lubricant production.

　　Sinopec's choice of Singapore as its first offshore lubricants manufacturing base boiled down to the republic's strategic location and its reputation as a centre for oil-trading hub, Song Yunchang, CEO of Sinopec Lubricant Company, said. As a relative newcomer to the Asia-Pacific, the company - ranked 23rd largest worldwide by Forbes - wants to develop the Sinopec brand as one synonymous with high-quality, high-technology products, Mr Song said.

　　Chua Taik Him, assistant managing director of the Economic Development Board (EDB), said the EDB was pleased that Sinopec was using Singapore as a business base to launch its products and to develop its brand name.

　　It hopes to encourage Sinopec to consider setting up its regional headquarters, manufacturing and R&D activities here next.

　　While the big four Chinese oil giants - CNOOC, PetroChina, Sinopec and Sinochem - have all set up oil-trading offices here, so far only PetroChina has a direct downstream presence.

　　It has invested US$160 million for a 35 per cent stake in the S$750 million Universal Terminal oiltank farm being built by Hin Leong Trading on Jurong Island.

《The Business Times》