Idemitsu Kosan will open a lubricant manufacturing and sales company in northern Haiphong port city to tap into growing demand for motorcycle engine oil and will start blending lubricating oil in Vietnam from January 2014.

The newly minted firm will have the total chartered capital of $23.3 million to produce engine oil for motorcycles and automobiles, general industrial lubricants and related products.

Idemitsu officials said the plant was in line with its corporate priority of "enhancing functional materials business.” Entering into overseas lubricant markets has also been identified as one of Idemitsu’s investment priorities over the next three years.

The firm said Vietnam had good growth fundamentals and in 2010 the number of motorcycles sold in Vietnam reached 3.8 million units. Demand for high-performance lubricants including oil for motorcycles is expected to continue to increase at a constant rate in Vietnam.

A representative of the new firm, said its lubricant blending facilities would cover 60,000 square metres with a manufacturing capacity of approximately 35 million litres of lubricants per year in Haiphong’s Dinh Vu-Cat Hai Economic Zone.

"Under the investment certificate, our project operation time is 46 years and construction will start in November 2012 and we launch first commercial products in 2014,” said the representative.

Idemitsu Kosan will target a lubricant sales volume of 20,000 litres per year and an annual turnover of $35 million by 2015.

Tokyo-based Idemitsu Kosan labeled Vietnam as a "core business” interest in its 2011 financial consolidated report, mainly as a result of its significant investment in Nghi Son oil refinery project which fulfills its strategy aimed at "business expansion through entry into growing overseas markets.”

The Nghi Son oil refinery, about 200 kilometres south of Hanoi, is slated to be operational by 2014 and have an oil crude refining capacity of 200,000 barrels per day.

Idemitsu Kosan holds a 35.1 per cent stake in Nghi Son as part of an international consortium tasked with developing the project. Kuwait Petroleum International, a unit of state-owned Kuwait Petroleum Corp, holds 35.1 per cent, while Vietnam’s state-run PetroVietnam and Japan’s Mitsui Chemicals Inc. own 25.1 and 4.7 per cent, respectively.