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Liberalization in lube market puts pressure on Pertamina. (Mines And Energy).



Liberalization lib·er·al·ize  
v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es

v.tr.
To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . .
 n the lubricant Lubricant

A gas, liquid, or solid used to prevent contact of parts in relative motion, and thereby reduce friction and wear. In many machines, cooling by the lubricant is equally important.
 oil sector with the issuance of a presidential decree No. 21 in 2001, Pertamina has suffered a big cut in market domination from 85% to 58% now. Pertamina said it shares of the market of engine and industrial lubricants lubricants

preparations for the lubrication of passages to reduce frictional injury, e.g. oily preparations, including petroleum jelly, lanolin or water-soluble preparations such as methyl cellulose.
 has been reduced over the past 20 months as a result of the liberalization policy adopted by the government. Market competition is indicated by intensive advertisements by its rival in promoting their product. Promotional drives have been launched with high incentive including prize and attractive discounts.

Not to be left behind, Pertamina itself has come up with new products and offered prize as expensive as Jaguar X Type 2.0 V6 SE car and three other cars Honda Accord The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page.
 Vt, Peugeot 206 MPX MPX - Multiplexor Channel  and Toyota Kijang LGX LGX Logistics
LGX Light Guide Cross-connect
LGX Linux / GNU / X
LGX Light Guide Crossconnect (Ciena) 
 1.8. There are smaller prizes including TV sets and handphone. The prizes are offered to buyers of its new products--Fastron, Prima XP, Meditrans and 2T Enviro en·vi·ro  
n. pl. en·vi·ros Informal
An environmentalist.
.

Pertamina has been aware that since the liberalization policy will will face tight competition, therefore it has taken necessary step to prevent itself from being robbed too much of its share. The company has improved the quality even the appearance of the package of its products, and it has cut the price of some of its products. Its Fastron Oil for example, which could be used for 7,500 km running without being replaced, is sold only at Rp 20,000 per liter. This is far cheaper compared with Top One which is sold at Rp 29,000.

The promotional campaign with expensive incentive is a great success. Top One, Shell and other products are also advertized with attractive prizes through the mass media including television, newspaper, magazines and radio. Advertisement has become an effective marketing instrument.

PT Wiraswasta Gemilang Indonesia, a private Indonesian company producing Penzoil and Evalube under licenses from foreign brand holders, has a market share of 12% for engine lubricant and 3% for industrial oil. Wiraswasta this year increased its budget for marketing through advertisement by 15% from last year. Sales of Penzoil and Evalube in 2002 totaled 42 million liters.

PT Agip Lubrindo Pratama which produces Agip has a market share of 5% but it has made progress and taken advantage of the liberalization policy. Its market share is relatively small but it the third largest after Pertamina and Wiraswasta. Now with an annual capacity of 30,000 tons it is running at full capacity. Previously Agip was imported. Agip built its factory in the country in Pasuruan, East Java East Java (Indonesian: Jawa Timur) is a province of Indonesia. It is located on the eastern part of the island of Java and also includes neighboring Madura and Bawean islands. , in 1997.

Now Pertamina dominates 58% of the domestic market. No company in other countries has a market share of more than 50%. Though Penzoil and Agip have made progress in market, they could not easily get further to grab the share of Pertamina. Now Pertamina has three factories with sales around 336,000-400,000 kiloliters per year.

The pressure in the market competition faced by Pertamina comes form various products mainly foreign products including those entirely new to the public such as Top One, Shell Helix, Caltex, Castol, Federal Oil, BP, United, Unicorn, Capiro, Millenium, BFT (Binary File Transfer) An extension to the fax protocol that allows transmission of raw data. A page of text is transmitted faster than a bitmap of the page and is displayed at normal printer resolution at the receiving side. .

The floods of imported products make it more difficult to differentiate original one and false ones. Consumers suspect that some of the products have been produced by recycling used lubricant without license and use popular brands. The registration number they use does not guarantee their quality as the government has given the number without properly examine the quality. Synthetic lubricant is produced through a reaction of poly alfa olefin olefin (ō`ləfĭn) or olefin series: see alkene.
olefin
 or alkene

Any unsaturated hydrocarbon containing one or more pairs of carbon atoms linked by a double bond (see
 (POA) with a certain composition of basic materials and additives. Synthetic oil Synthetic oil is oil consisting of chemical compounds which were not originally present in crude oil (petroleum) but were artificially made (synthesized) from other compounds. , therefore, is superior in thickness and is more resistant to heat and extreme cold. It is not easily damaged. Mineral oil could be used only for 5,000 km to 7,500 km running without being replaced or addition, but synthetic oil could last for 80,000 km running. Synthetic oil is sold only at Rp 20,000 per liter, cheaper than mineral oil, even cheaper than low quality mineral oil. The cheap price gives rise to suspicion that some of the synthetic oils sold in the market are false.

Pertamina said in the past year the volume of false lubricants has increased faster to reach 15% of the total annual consumption of 625,000 kiloliters in the country.

All foreign brands could be easily falsified. Therefore, Pertamina, apart from hiring foreign designers to better guarantee that its labels could not be falsified, has provide protection for the lid of its bottles with laser marker. The laser machines were bought by Pertamina at Rp 500 million per unit.

Capacity 679,160 tons

Pertamina operates three lube oil blending plants (LOBP) in Jakarta, Cilacap, and Surabaya. From the three factory Pertamina could produce up to 550,160 kiloliters of 150 grade including industrial, automotive and ship oils. Annual production, however is only half of the capacity. The products of Pertamina have gained international recognition in quality. Its Lube Oil Blending Plant in Cilacap has secured the ISO (1) See ISO speed.

(2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI.
 14001 and 9002 certificates.

Another producer of lube oil PT Dirga Buana Sarana started operation in 1989. The subsidiary of the Mercubuana Group has an annual capacity of 24,000 kiloliters. Based on a previous regulation the private sector may not produce lube oil from petroleum, but the small producer

Dirga Buana has been given an exception. Its product Union 76 is produced with a formula and technology of Unocal Lubricant Blending Technology. Its Valvoline is produced under license of Valvoline Lubricant Formulation USA.

In 1997, the number of lube oil producers increased with the operation of PT Wiraswasta Gemilang Indonesia (WGI WGI World Games Inc
WGI Winter Guard International
WGI Within Grade Increase
WGI Washington Group International, Inc.
WGI Working Group on Informatics (United Nations) 
) in Cibitung, Bekasi. The factory is integrated with a blending plant. The subsidiary of the Napan Group produces up to 75,000 kiloliter kil·o·li·ter  
n. Abbr. kl
A metric unit of volume equal to 1,000 liters (1,056 liquid quarts).

Noun 1. kiloliter - a metric unit of volume or capacity equal to 1000 liters
 or 67,200 tons of lube oils a year. At full capacity the company could produce 40 types of automotive and industrial lube oil. The company operates under -license of U.S. Penzoil.

The company uses Canada's Mohwak's technology of vacuum distillation Vacuum distillation is a method of distillation whereby the pressure above the liquid mixture to be distilled is reduced to less than its vapor pressure (usually less than atmospheric) causing evaporation of the least volatile liquid(s) (those with the highest boiling points).  for its lube purification purification, in religion, the ceremonial removal of what the religion deems unclean. The usual agents of purification are water (as in baptism), bodily alteration (as in circumcision), and fire.  process. Thermal process is used to separate lube oil from dirt under vacuum condition. Based on a Chevron laboratory examination, the Mohwak process could turn out a high rate of purity for base oil even exceeding the purity of base oil produced directly from oil refinery.

With four producers, the country could produce various lube oils not including aviation lubes totaling 679,160 kiloliters per year. Pertamina accounts for 81% of the total capacity and private companies for the rest.

Production up

Despite the slump that hit the automotive sector in 1998, the lube oil processing industry was hardly affected. The performance of the industry declined only by 17.8% with production down from 413,632 tons to 339,890 tons. The operation of PT Agip Lubrindo and PT Wiraswasta Gemilang contributed to the fairly high production. The two companies recorded an increase in production until 1998.

The country's total production began to rise again in 1999 to reach 508,177 tons in 2001 as shown in the following table.
Table-3

Indonesia's production of lube oils,
1997-2001

Year   Production     Growth
       (Kiloliter)     (%)

1997        413,632       -
1998        339,891    -17.8
1999        404,926     19.1
2000        415,419      2.6
2001        508,177     22.3

Source: Directorate General of Oil and Gas/Data Consult

Table-1
Price list of lubricant oils by brands

                           Price                              Price
Brand                      per can           Brand            per can
                            (Rp)                               (Rp)

MESRAN                              PENZOIL
- Prima 20 W - 50           15,300  -GT Performance 20W-50     21,000
- Prima 20 W - 50 XP        17,400  -2T For Engines            15,000
- Super 20 W - 50           13,900  -Motorcycles oilc          16,500
- Super 20 W - 50 XP        15,300  -Long Life 15W-40          17,500
- Mesrania 2 T Super        13,700  -GL - 4 Gear Lub SAE 90    23,000
- Mesrania 2 T OB           11,100  -GL - 4 Gear Lub SAE 140   25,000
- Meditran S-30-S-40        13,100
- Medidtran S C             15,000  CALTEX
                                    -Five Star                 21,000
REPSOL                              -Havoline Energy           68,000
- Elite Faster 5 W - 50     77,000  -Havoline Motor Oil        24,000
- Elite Competion 5W - 40   72,000  -Valor 300                 25,000
- Elite Megafluk            32,500
- Elite Super 20 W - 50     33,000  CASTROL
- Motto Competion 2T        53,000  -Syntron SAE 5 W - 50      75,000
                                    -2T Low Smoke              16,500
Valvoline                           -GPS Extra 20 W - 50       22,500
- Super HPO HD - 30         23,100  -G.O 4T                    15,000
- ATF Dextron 11 D          30,250  -G.O 2T                    15,000
- Super XLD 20 W - 50       27,000
                                    TOTAL
MOTUL                               -Quaartz 7000 15w - 50     38,750
-6100 SAE4T 10 W-40-40      55,060  -Quartz 9000 5w - 40       51,500
-6100SAE 15 W - 50          50,000  -Rubia XT 20W - 40         26,500
-300 V SAE 15 W - 50       120,000
-HDX 80W - 90               55,000  AGIP
-5100 4T 10W - 40           40,000  -Extra HTS 5W - 40         72,000
                                    -Super Motor Oil 20W-50
                                    -Diesel Sigma SAE 40       17,250
                                    -Rotra MP SAE - 90         16,500
                                    -2T Low Smoke              22,500
                                                               14,500

Table-2
Lube oil producers and production capacity, 2002

Producers/                          Capacity
company                 Location   (KL/year)

Pertamina               Cilacap      190,160
                        Jakarta      270,000
                        Surabaya      90,000
Dirga Buana Sarana      Jakarta       24,000
Wiraswasta Gemilang     Bekasi        75,000
Agip Lubrindo Pratama   Sidoarjo      30,000
Total                                679,160

Source: Data Consult
COPYRIGHT 2002 P.T. Data Consult, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002 Gale, Cengage Learning. All rights reserved.

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Comment:Liberalization in lube market puts pressure on Pertamina. (Mines And Energy).
Publication:Indonesian Commercial Newsletter
Article Type:Industry Overview
Geographic Code:9INDO
Date:Dec 3, 2002
Words:1548
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