Chevron Lubricant recaptures over 50% market share in 1Q after nine years

By Nishel Fernando
Despite intensifying competition following the entrance of new players, Chevron Lubricant Lanka PLC (LLUB) regained over 50 percent market share in the country’s lubricant market in the first quarter of this year after nearly nine years.

During the first quarter of this year, Chevron’s market share jumped to 53.84 percent or 11,080.03 kilo litres from 41.46 percent or 8,395.68 kilo litres recorded a year ago, the lubricant market data released by the Public Utilities Commission of Sri Lanka (PUCSL) showed.

In the quarter, lubricant market expanded by 1.63 percent Year-on-Year (YoY) to 20,578.64 kilo litres despite declining demand for automotive oils and greases. 

In 2021, the lubricant market recovered by 13.50 percent YoY to 68,017.69 kilo litres from pandemic-related mobility restrictions. Chevron led the industry recovery last year recording the highest volume levels over the past five years and it maintained 41.65 percent market share slightly below 42.48 percent in 2020.

In the first quarter of 2022, ExxonMobil Asia Pacific Pte. Limited became the third largest lubricant player with 7.71 percent market share replacing Laugfs Holdings Limited whose market share plummeted to 4.26 percent. 
After increasing its market share to 20.50 percent in 2021 from 17.32 percent in 2020, Indian Oil Corporation Limited solidified its position as the second largest player by maintaining 20.05 percent market share in the first quarter.

According to the PUCSL, which functions as the shadow regulator for the lubricant market, the number of players authorised to import, export, sell, supply or distribute lubricants and greases doubled to 22 from 11 during 2021 as the Energy Ministry issued licenses to new players under the third round of liberalisation of the country’s lubricants industry.

However, no new licenses were issued authorizing to import, export, blend, produce, sell, supply or
distribute lubricants and greases and the number of players under that category remains unchanged, which include Chevron, Ceylon Petroleum Corporation (CPC), Indian Oil Corporation and Laugfs Holdings.

Among the new players, Gulf Oil Middle East Limited was the most successful. It became the eighth largest player with 1.42 percent market share after commencing sales in the fourth quarter of last year. 
In addition, APAR industries Limited, G S Caltex Corporation, Prista Oil Holding EAD and Petronas Lubricants (India) Private Limited accounted for 0.75 percent 0.10 percent, 0.04 and 0.02 market shares respectively in the country’s lubricant market during the period.

However, most of the new players including GP Global Mag L.L.C,  Lukoil Marine Lubricants DMCC,  Idemitsu Lube India Private Limited, Lubrex FZC and Liqui Moly GMBH had not started their sales operations in the first quarter. 

Further, other license holders including Tide Water Oil Co.(India) Limited, ENOC Marketing LLC, Idemitsu Lube India Private Limited and Tide Water Oil Co. (India) Limited were  still in the process of finalising some of the key details of operations including appointment of local distributors.

The lubricant demand is expected to remain under pressure, due to the multi-dimensional economic crisis, particularly with the on-going fuel shortages as well as continuation of the embargo on vehicle importation coupled with adverse impacts of high inflation on vehicle usage. 

In addition, lubricant industry players are also expected to witness pressure on their bottom lines driven by rising financing costs, taxes and potential foreign exchange losses.

Despite reporting 77 percent YoY increase in sales, Chevorn’s earnings in the quarter fell by 39 percent YoY below one billion rupees mainly due to an unprecedented increase in finance costs, foreign exchange losses, taxes and increases in other expenses.