Interview with Kin-Seng Cheong, Supply Chain Asia Pacific, General Manager, Shell Lubricants
While Reuters recently reported that power companies in India and Southeast Asia continue to tap on abundant and cheap domestic coal resources to generate electricity, the outlook for renewable energy continues to be modestly optimistic. Experts estimate that by 2050 the global population will increase from seven billion to nine billion, with the majority living in cities.
As cities grow, this will put additional strain on overstretched energy resources, and the industry cannot continue to only rely on coal in the long run. This is why more energy companies are moving towards natural gas, which is one of the cleanest-burning fossil fuel. Shell, for example, is one of the firsts in the industry to create a technology that converts natural gas to liquid products.
“Natural gas is the cleanest-burning hydrocarbon. It is abundant and versatile, helping meet growing demand for energy globally, and able to partner with renewable energy sources. Additionally, when converted to liquid products, such as base oils for lubricants, it positively influences fuel economy, wear and tear, longevity, cleanliness and performance in vehicles and machinery,” says Mr Kin-Seng Cheong, Supply Chain Asia Pacific General Manager for Shell Lubricants.
In this issue of Supply Chain Asia magazine, Mr Cheong shares with us his thoughts on clean energy solutions, the importance of Asia Pacific for Shell Lubricants, and the company’s efforts in building talent of the future.
Working towards the new energy
Through its Shell PurePlus™ Technology, a first-of-its kind process that converts natural gas into unique, pure and crystal-clear synthetic base oil, Shell Lubricants caters to growing demand for efficient and high-quality products for energy-conscious consumers.
Shell as a group continues to “power progress together by providing more and cleaner energy solutions,” and this is evident in its new business, New Energies, which was recently created to look at low carbon options for the future.
Cashing in on Asia Pacific
Demand for lubricants in Asia is expected to grow by 18 per cent, hitting 20 million tons by 2025, almost half of the global demand.
“Within the Asia Pacific region (which comprises of Northeast Asia, Southeast Asia and India), I think Shell is clearly a market leader. Shell Lubricants companies lead the global lubricants industry for the ninth consecutive year, supplying 12 per cent of global lubricants volume, and its dominance in the Asia Pacific market reflects it overall market share. Even within Shell Lubricants, Asia Pacific easily makes up one-third of our businesses.
This means we will continue to invest in this region, even though we already have 14 lubricant blending plants, seven grease manufacturing plants and three base oil plants,” says the Malaysian-born General Manager. This was reflected in Shell Lubricants setting up its first Asian R&D centre in Shanghai in 2014. The research work in this 8,600–square-metre, nine-storey building will cover a wide range of product applications, including passenger car motor oils, motorcycle oils, heavy duty engine oils, transmission fluids, as well as industrial and specialty oils and greases. It will also provide hands-on technical services to customers. In addition, its laboratory facilities will enable the running of field trials, performance demonstrations and bench-testing.
“The centre is unique in the sense that it has collaborations with local academic institutions, such as Tsinghua University. Talent is abundant there, and most of our R&D workers are PhD holders. But it does not mean our focus is only on China. We will ensure that the centre’s product development and application will benefit the wider Asia region covering countries, such as India, Indonesia, South Korea, Thailand, Vietnam, Malaysia, Philippines and Singapore,” states Mr Cheong. Even the global economic slowdown does not hinder the consumption in Asia Pacific. While there is a slight decline in lubricants consumption in commercial vehicles and industrial machinery, positives in other sectors mean consumption growth in the region continues to be in the green zone.
“There is a major growth in passenger cars and motorcycles. Customers are becoming more demanding and discerning. They are appreciative of good lubricants, and this means there is a shift towards synthetic-based lubricants, which helps extend engine life, reduce maintenance costs, reduce oil consumption, enhance fuel economy and enable better engine cleanliness,” says the former chemist, who once worked at a pharmaceutical laboratory. As part of its continued growth strategy in Asia, Shell has recently opened its latest lubricant blending plant in Indonesia, which is also the largest operated lubricant plant among the international oil companies in the country. This plant brings the company’s world-class lubricant production capability to Indonesia, and strengthens its supply chain. It also ensures that Shell meets the lubricant needs of its Indonesian customers, providing a variety of customer services as well. But Shell is not the only company that is closely monitoring the region.
National oil companies are also trying to expand their operations beyond their respective countries. Sinopec Group, a major stateowned petroleum energy and chemicals company in China, has been in operation in Tuas since 2013, and has been playing a significant role in its business expansion in Asia Pacific. “Shell believes in the benefits of open competition. While we are not concerned about our competitors, naturally, we are watchful and vigilant. Market conditions can change suddenly, and we cannot be complacent. But at the end of the day, the reality is that it is difficult to beat a brand as strong as Shell, which has been in the business for many years. We are confident that we will continue to be a strong force in the industry,” explains Mr Cheong.
Beyond just building state-of-the-art infrastructure and working on new energy solutions, Shell is also committed to building future talent. The company invests in global graduate programmes, including in Singapore. “Singapore government is well-known for its forward-thinking mentality, and we take advice from them when it comes to our quest to boost talent, specifically in supply chain sector. We have a supply chain graduate programme where we accept graduates and expose them to multiple different sectors, such as supply chain and manufacturing. We work with local universities, such as Nanyang Technological University, National University of Singapore and Singapore Management University. It is quite a stringent programme as it is typically not easy for new graduates to start at Shell,” says Mr Cheong, who is optimistic that the gap in supply chain talent can be bridged in the near future.
But the career of a supply chain professional is not necessarily straightforward. Before joining Shell in 1991, Mr Cheong worked in the surface coating technical development and pharmaceutical manufacturing industry. His start in the laboratory was what helped him step foot in Shell. “I have very good memories of working in the laboratory. Unfortunately, I have passed that stage in my career of being a chemist. It was a good starting place though. If it were not for my initial job position in a laboratory, I would not have gotten this job offer from Shell. It is an interesting link,” reminisces Mr Cheong.