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Despite the current global economic climate, Nippon Oil Corp. is taking steps to expand its lubricating oil business in South East Asia and increase the production capacity of its recently-acquired lubricants business in Singapore, according to market sources.

In October 2008, Nippon Oil (Asia) Pte Ltd. acquired a 55 percent stake in Singapore-based lubricants manufacturer ItalSing Petroleum Company Pte Ltd. (ItalSing), after joint venture patners Singapore Petroleum Company Limited (SPC) and Eni International B.V. (ENI) decided to sell shares in the company, leaving both companies with a 22.5 percent share each.

The newly-acquired firm was then converted into a subsidiary named Eneos ItalSing Pte.., paving the way for Nippon Oil to boost lubricant sales in Southeast Asia.

The company, which also produces lubricants for the marine industry, is expected to increase the production capacity of its manufacturing subsidiary in Singapore by some 30-40 per cent, and widen its partnership with South Korea's SK Corp.

Eneos ItalSing Pte. is able to produce 50,000 kilolitres (kl) of lubricating oil per year, but Nippon Oil reportedly intends to increase this by some 15,000kl to 20,000kl.

Nippon Oil already has two production bases for lubricants in China and plans to make Eneos ItalSing another base for the Asian market. The Singapore facility will take over production of lubricants now outsourced to other firms in Southeast Asia in order to boost profits and strengthen quality control, with a view to increasing shipments to other countries in the region, including Thailand and Indonesia.

The lubricants currently being exported from Japan will also be shifted gradually to local sites to lower currency exchange risks.