SK Lubricants Acquires 49% Stake in Vietnam's Largest Lubricant Company 'Mekong'

[Asia Economy Reporter Hwang Yoon-joo] SK Lubricants, a lubricant business subsidiary of SK Innovation, announced on the 9th that it has signed a contract to acquire a 49% stake in 'Mekong,' the largest private lubricant company in Vietnam.

Although SK Lubricants operates joint production facilities domestically and internationally through global partnering, this is the first time it has made an equity investment in an overseas lubricant company.

As of 2018, Mekong holds a 6.3% market share in the Vietnamese lubricant market and has seven lubricant-related affiliates, including two tank terminals, a lubricant manufacturing plant and logistics center, and 12 distribution and sales branches across Vietnam. The company also plans to integrate distribution and sales companies as Mekong subsidiaries to expand its lubricant business in the future.

The Vietnamese lubricant market is dominated by the three global majors (BP Castrol, Shell, Chevron), with no lubricant company holding more than a 10% market share besides them. Mekong is the only Vietnamese lubricant company showing growth, increasing its market share from 4.3% in 2012 to 6.3% in 2018.

At the signing ceremony, Cha Gyu-tak, President of SK Lubricants, said, "Combining Mekong's local production and sales infrastructure with SK Lubricants' SK ZIC brand and product technology capabilities will enable rapid growth in the premium lubricant market in Vietnam and lay the foundation for business expansion in the ASEAN market."

SK Innovation explained that Mekong has been working to expand its premium lubricant market share through its nationwide sales network, while SK Lubricants has been innovating its business model (BM) to establish a stable supply chain by transforming its export-oriented growth model. The mutual understanding between the two companies led to this agreement.

Through this cooperation, the two companies plan to expand their business by selling lubricant products exported by SK Lubricants and having Mekong manufacture and sell base oils exported by SK Lubricants. They also plan to improve existing infrastructure by expanding storage facilities, replacing aging equipment, and strengthening sales network competitiveness to expand business not only in Vietnam but throughout ASEAN.

SK Lubricants, based on its position as the world's No. 1 Group III base oil producer, production of premium lubricants meeting global standards, and research and development capabilities, has been continuously seeking global partnerships focusing on high-growth-potential ASEAN markets such as Vietnam, the Philippines, and Thailand.

Therefore, with this equity acquisition, SK Lubricants has instantly established a lubricant business value chain encompassing production, storage, distribution, and sales throughout Vietnam. This also lays the groundwork for a full-scale entry into the ASEAN lubricant market. SK Lubricants already operates joint ventures in Ulsan, Indonesia, and Spain with prominent global partners such as Japan's JX Energy, Indonesia's Pertamina, and Spain's Repsol.

The Vietnamese lubricant market is expected to grow nearly twofold from 3.5 million barrels in 2019 to 6.4 million barrels in 2028. Additionally, as national income rises, the penetration of passenger cars and commercial vehicles is accelerating, leading to a rapid increase in demand for premium lubricants. Despite these market conditions, global major companies dominate the market, and there are almost no competitive Vietnamese companies.

This content was produced with the assistance of AI translation services.