Building-trust-in-Kuwaits-local-lubricants-Adnan-ASHKANANI

Demand for lubricants is growing in Kuwait and we are gearing up to capitalise on this positive momentum.

Adnan ASHKANANI General Manager KUWAIT LUBE OIL COMPANY

Building trust in Kuwait’s local lubricants

May 7, 2024

Adnan Ashkanani, general manager of Kuwait Lube Oil Company, talks to The Energy Year about current dynamics in regional markets for oils and lubricants and how the company is adapting to shifts in demand. Kuwait Lube Oil Company is a refiner that manufactures automotive and industrial oils and lubricants.

What is your assessment of the domestic downstream sector and how is it guiding your business strategy?
The downstream sector is evolving in Kuwait. Demand for lubricants is growing and we are gearing up to capitalise on this positive momentum. We want to penetrate more segments by adding products that we didn’t have before, such as synthetic oil, brake fluid, and many more, and also by changing some recipes to make them more competitive.
We won three KNPC tenders in 2023 to supply lubricants that we made to their specific requirements. This is a big step in our provision of services to the K-companies.
We aim to become increasingly involved in ministerial tenders and to supply products in partnership with reputable international lube oil manufacturers. We are optimistic about signing new contracts with the MEW [Ministry of Electricity & Water & Renewable Energy], given our track record with them.
We also provide mould oil to the National Industries Company. It is used to prevent concrete from adhering to the surface of moulds, ensuring the smooth and easy release of the cast.

 

What are the main barriers preventing companies like KLOC from growing in Kuwait and abroad?
Despite growing demand, there is a lack of trust in local products. We have all the resources to produce high-quality output that can compete with top brands, but international companies invest much more in marketing and commercialisation than we can do. We are in the process of building up strong customer relationships and gaining a respectful market share locally.
Domestically, the smuggling of used oil is a challenge as well. It has a large negative repercussion on used oil prices and efforts to put an end to it should be significantly reinforced. Domestic legislation that safeguards local producers of lubricants and refined waste oils would generate good opportunities for us and be a huge help for our expansion.
The recycling business is also very challenging in Kuwait, and we are looking for more support from municipalities, Customs authorities and the Ministry of Commerce and Industry to streamline operational and export procedures. We have great appreciation for the Kuwait Environment Public Authority and the Public Authority for Industry for their valuable support to the recycling sector.

What is KLOC’s footprint in Kuwait in terms of assets and market position?
Market position in Kuwait depends on factors such as product quality, brand reputation, pricing strategy, customer service and relationships with distributors and end-users. KLOC, as a local manufacturer, has advantages such as proximity to customers and knowledge of local market preferences. We recycle around 40% of the used oil in Kuwait and produce around 45% of locally-made lubricants.
Our refinery has a capacity of 25,000 tonnes per year. While we don’t have any current plans to expand our capacity, we do want to launch new products that have wider applications in vehicles and machinery.

What are the main challenges to expanding your operations beyond national borders?
We already export our products to Iraq, Saudi Arabia, Egypt, Jordan, Lebanon and Somalia. We are touching base with other countries in Africa to build up our international sales, but shipping charges may still be on the high side for sustained supply, particularly from Kuwait. It’s cheaper for those countries to receive products from Jebel Ali port, as a larger number of ships stop at that port and the prices are generally more competitive.
Exporting costs have inflated across the region due to the Middle East crisis and the instability it has produced. While the company has a fleet for local transportation, to go beyond borders we rely on third parties, which adds other difficulties.

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