Pertamina to acquire a Thai lube plant

State oil and gas company PT Pertamina is seeking to acquire a lubricant processing plant in Bangkok, Thailand, as part of its global expansion to penetrate the promising market in the Indo-China region.

Pertamina refused to identify the firm, saying that negotiations for the acquisition are still underway and only after being secured that it would be identified.

But Pertamina?s International Marketing Director Redesmon Munir said that the factory belongs to a private company in Thailand.

Currently, lubricant players in Thailand include state-owned Thai Petroleum & Trading Co., Ltd., UK-based BP subsidiary BP-Castrol (Thailand) Ltd. and Power Up Lubricants ( Thailand ) Co., Ltd., a local unit of Canada-based Maryn International Ltd.

?We?ve prepared a total fund of Rp 100 billion (US$10.3 million). It?s enough for 100 percent acquisition. But we?ve planned to take over at least the majority of shares so that we can control its assets, especially the lubricant processing plant,? he said as quoted by The Jakarta Post on Tuesday.

But he noted the Thai regulations as the potential hurdle to its planned acquisition, as the regulations only allow foreign companies to acquire a maximum of 49 percent stake in local firms.

According to him, the Bangkok-based plant now has a production capacity of 60,000 kiloliters of lubricants per year. Acquiring the facility will facilitate Pertamina?s efforts in entering lubricant markets in Thailand, China , Vietnam, Laos and Myanmar.

?Thailand is located in the center of the Indo-China region. By having such processing plant in Thailand, then we?re in a strategic place to penetrate the region?s market,? he said, adding, ?Hopefully, we can reach the acquisition deal as planned next year (2013).?

The move was the latest effort by Pertamina to enter the global market. Over the past four years, Pertamina has managed to penetrate markets in 20 countries around the globe.

In the first half of 2012, Pertamina exported 110,000 kiloliters of lubricants, mainly to Japan , China and the United Arab Emirates . Pertamina?s exports in the first half of the year were 62 percent of the firm?s annual target of ~180,000 kiloliters.

This year Pertamina Lubricant has allocated Rp 8 trillion in capital expenditure to expand its businesses overseas and increase revenues.

Last week, Pertamina launched its first shipment of its automotive lubricants to Switzerland and South Africa as part of the company?s campaign to further expand its lubricant market into Europe and Africa.

Pertamina has also planned to spin off its lubricant business unit into a new subsidiary. It will be called PT Pertamina Lubricants, and will be officially launched next month (December 2012). (*)