Global oil giant BP yesterday formed a lubricant joint venture in the capital city of Central China's Hubei Province with the nation's vehicle manufacturer Dongfeng Motor Corp.

According to a 30-year contract, BP will have a 50 per cent stake in the joint venture, named Dongfeng Castrol Lubricant Co Ltd.

Dongfeng Motor and its Shanghai-listed subsidiary Dongfeng Automobile Co Ltd will control 20 and 30 per cent shares in the venture respectively.

The joint venture, with a total investment of 120 million yuan (US$14.5 million), will have an annual production capacity of 30,000 tons of lubricants and 20,000 tons of antifreeze products.

Dongfeng Castrol Lubricant is the first lubricant joint venture between a global oil company and a major Chinese automaker, said Chen Yan, chairman of the venture.

"We firmly believe that such collaboration will make it possible to bring together engine technology development, lubricant technology expertise, international management practices and local market knowledge.

"All these elements will contribute to the success of this partnership, which in turn will greatly enhance our ability to build our market presence in China," Chen said.

The venture's products will be used for both the first-fill and service fills for the full range of automobiles produced by Dongfeng Motor.

BP sold some 70,000 tons of lubricants in China last year, said Andy Graham, president of BP's retailing business in China.

The oil giant now has a lubricant blending plant with an annual capacity of 80,000 tons in South China's Guangdong Province.

BP has invested more than US$3 billion in China so far.

Its activities in China also include production and import of natural gas, supply of aviation fuel, import and marketing of liquefied petroleum gas, fuels retailing, petrochemical manufacturing and solar electric facilities.

"We hope the lubricant joint venture will add more value to Dongfeng Motor," said Zhou Wenjie, vice-president of Dongfeng Motor.

Dongfeng, one of China's biggest automakers, expects to sell nearly 700,000 automobiles this year, in which 60 per cent will be passenger vehicles and 40 per cent commercial vehicles, Zhou said.

Last year, Dongfeng's sales stood at 523,300 automobiles.

Dongfeng runs vehicle joint ventures with PSA Peugeot Citroen, Honda, Nissan and Kia.

(China Daily June 9, 2005)