Cape Town, South Africa: Multinational oil corporations are exiting the African lubricant market as part of strategies to streamline business operations and ensure efficiency and profitability, stakeholders told BND at the 10^th ICIS African Base Oils and Lubricant Conference in Cape Town. Siva Konar, Marketing Segment Manager, Middle East and Africa at Azelis, said that major oil corporations are looking more upstream even though they will never leave the continent’s lubricant market completely. “I think the majors are looking more upstream than downstream,” Konar said. “I mean, their brands won’t pull out of the African lubricant market, but the model to sell it will be different. So, it doesn’t look like there is an appetite for having ownership and hardware and skill on the ground for multinationals, which is fine because it builds opportunities for indigenous companies.”

For his part, Dr. John Erinne, CEO of Matrix Patro-Chem, explained that there are indications that major oil corporations have withdrawn from the downstream market in most African countries. “The truth is that the international companies’ kind of withdrew from the downstream market in most African countries apart from Total,” Erinne said. “Total has persevered, and I believe that Total is convinced that they understand the African market and the African terrain, and they are prepared to sit it out, and I believe they are making a good success of it.”

Erinne explained that the exit of major oil corporations might have resulted from a bit of lack of confidence in the local lubricant market but added that it has much to do with market development. “As the market evolves, players and participants access themselves and reevaluate their strategies,” he explained. “I think the African downstream market, including lubricants, is at a stage where many of them felt that their best interests were served by pulling out of direct participation in the market. Many still have licensing agreements, so their brands are sold across the African continent.” He explained that a couple of years ago, the Nigerian lubricant market was dominated by major oil corporations, which have now divested from the market.

In Nigeria, majors such as Agip, Texaco, Mobil, Elf, and Shell have exited the local lubricant market. Similarly, in South Africa, multinationals such as Shell, Chevron, Puma, and Engen have exited the South African lubricant market. However, these multinational oil corporations still maintain their presence in the local lubricant market through licensing and partnership agreements with indigenous oil companies.