Repsol - Bardahl Partnership

Repsol invests in its lubricants business in Mexico and creates a partnership with Bardahl

Repsol created a joint venture with Bardahl in its largest purchase in this business, spearheading its Downstream area's internationalization strategy.
The company will produce and sell its lubricants in Mexico via Bardahl, a brand with extensive experience and renown holding one of the most modern production plants in Latin America and an extensive distribution network throughout the country.
The transaction is part of the growth plan for Repsol's Lubricants area and will double the area’s turnover up to 300,000 tons in 2021, with 70% from international business.
Mexico will become one of Repsol’s major lubricants markets as well as the company’s lubricants production hub for Latin America.
The acquisition is in line with Repsol’s strategic plan, which budgets a 1.5 billion euro investment until 2020 to internationally expand its petrochemicals, service station, lubricants, and trading businesses.

Press release

Repsol has reached an agreement to acquire 40% of Mexican company Bardahl, which produces automotive lubricants and fluids. It is the largest transaction carried out anywhere by Repsol’s lubricants business, the company most global unit, whose internationalization strategy is notably spearheaded by this partnership.

By virtue of the agreement, Repsol will produce and sell its lubricants in Mexico via Bardahl, with the same safety and quality standards as those in Spain. Bardahl is a company with proven expertise and renown. It holds one of the most modern production plants in Latin America, located in Toluca.

Bardahl is a major automotive lubricants and additives producer in Mexico and it sells its products throughout the country via its own distribution network and other channels. The connection to Repsol guarantees it will grow and create value, driven by the Spanish company’s know-how, experience, and technology.

With this transaction, Mexico will become one of Repsol’s major lubricants markets as well as the company’s lubricants production hub for Latin America.

Repsol plans to invest close to 400 million euros on opening between 200 and 250 service stations per year in Mexico until 2022, in order to reach a market share between 8 and 10%. Repsol's current network is made up of 60 service stations in nine states: Mexico City, Mexico State, Veracruz, Baja California Sur, Jalisco, Oaxaca, Puebla, Hidalgo, and Tlaxcala. This Repsol investment in the service station market is not part of the transaction with Bardahl.

It is a market with great potential for growth and a rapidly growing economy, a population of more than 120 million people, and a fleet of 41 million vehicles being renewed. It is currently the number two country in Latin America by lubricant sales volume (725,000 tons/year, only surpassed by Brazil) and the ninth in the world.

Given how well the two companies complement one another both in terms of positioning and in terms of distribution, the JV will sell Bardahl and Repsol brand lubricants in Mexico.

The transaction is expected to involve the creation of a Bardahl (60%)-Repsol (40%) joint venture and is slated to be finalized in Q3, subject to the necessary regulatory authorizations.

The partnership with Bardahl is part of the growth plan for Repsol's Lubricants area and will double the area’s turnover up to 300,000 tons in 2021, with 70% coming from international business. To reach this goal, it will invest up to 80 million euros in holdings in lubricant plants, especially in Latin America and Asia, in countries like China, Indonesia, and India.

Spain currently represents approximately 55% of Repsol’s lubricants sales with international business making up the remaining 45%. The goal is for sales outside Spain to account for 70% of the total by 2021.

The Lubricants business is the company's most international. It has operations in over 80 countries, more than 70 distribution contracts, 11 production licenses (covering the major areas of growth around the world including Brazil, Russia, China, Japan, India, Indonesia, and Malaysia), and eight sales offices.

The operation is in line with Repsol’s Strategic Plan, which earmarks 15 billion euros for investment until 2020, of which 4 billion will be allocated to new initiatives, especially in the Downstream area, both to expand the petrochemicals, service station, lubricants, and trading businesses (1.5 billion) and for low CO₂ emissions projects (2.5 billion).

Repsol in Mexico

The agreement reaffirms Repsol’s position in the Downstream area in Mexico, where it has operations in several areas. Last March, the company inaugurated its first Mexican service stations, initiating a long-term project separate from the lubricants business with Bardahl.

It also maintains its partnership with the Kuo Group, with which it founded Dynasol, one of the 10 largest synthetic rubber companies in the world, in 1999. It has plants in Altamira (Mexico), Santander (Spain), and China.

Moreover, in hydrocarbon exploration and production, it was awarded six exploratory blocks in Mexican calls to tender (one block in round 2.1, with Sierra Oil & Gas, in September 2017; three blocks in round 2.4 in January 2018; and another two in round 3.1 last March).