Pakistan one of top 3 in Chevron’s portfolio

KARACHI: 

Pakistan is one of the top three markets in Chevron’s worldwide lubricants portfolio based on its high profit margins, a company official said on Wednesday.

Addressing a press conference, Chevron Pakistan Lubricants Chairman Muhammad Najam Shamsuddin said the company will make an equity investment of over Rs2 billion from 2016 to 2018 to upgrade its infrastructure in the country.

Chevron Pakistan Lubricants is an indirect subsidiary of Chevron Corporation, which is the world’s fourth largest integrated energy company.

The equity investment will be used in upgrading and expanding its lubricants blending plant in the West Wharf area of Karachi as well as other facilities across Pakistan.

“Some people thought Chevron would exit the lubricants industry once it divested its fuel business. Chevron isn’t going anywhere. We are scaling up our investments instead,” Shamsuddin said.

US-based Chevron exited its fuel retail and storage business in Pakistan recently by selling it to Total Parco Pakistan.

Chevron Pakistan Lubricants trades under the Caltex brand in Pakistan and markets its lubricants products in the country under the Havoline and Delo brands.

It is one of the major players in Pakistan’s lubricants industry and controls a share of roughly 24%, according to Shamsuddin. Other major players include Shell, ZIC, Total and PSO.

The company will use the new investment to increase its production by over 36% — i.e. from current 55 million litres per annum to 75 million litres per annum. “We see high growth prospects in Pakistan,” he added.

Lubricants are made by mixing additives with base oil. While some companies import base oil, others buy it from local refineries. Additives, on the other hand, are always imported. Some companies import lubricants in the finished form while others operate their own plants to manufacture lubricants locally, including Chevron Pakistan Lubricants.

The company established a chain of 65 oil change facilities across Pakistan during the last 18 months as it no longer operates petrol pumps of its own. “We plan to have up to 150 such facilities by the end of 2017,” he said.

Although he refused to divulge the company’s financials citing its status of a privately held entity, Shamsuddin said last year’s gross profit was Rs3 billion.

Another major player in the lubricants market – Hi-Tech Lubricants that produces ZIC – is in the process of the initial public offering (IPO). Its gross profit for the last fiscal year amounted to Rs1.3 billion, which is less than half of the gross profit posted by Chevron Pakistan Lubricants.

“We don’t plan to go for an IPO right now,” he noted.