The board on Thursday approved acquisition of 51 per cent stake in Chinese company, which was wholly owned-by Gulf Oil International at cost of $ 5 million, GOC executive director V Ramesh said.
The new capital infusion would be used to build up a new manufacturing facility in Yantai in Shandong province in China with a capacity of 30,000 MT per annum, he said.
With the commissioning of the plant in April-May 2006, Gulf Oil and its associates would have a total manufacturing capacity of more than two lakh tonnes in the region,he said.
The new factory would be located in an economic zone with tax benefits, the company said, adding, with large base oil storage capacity, Gulf Oil would use this plant to supply to countries including Taiwan, South Korea, Vietnam and Japan as well as aggressively trade in base oils in China.
Gulf Oil Yantai, which started in 1996 is currently catering to some provincial markets and is expected to be marketing all over China and is expected to gain five per cent market share in next 3-4 years.
Ramesh said Gulf Oil Corporation may look at establishing new plants in various part of China as the market in that country was expected to grow at five per cent per annum to 5.5 million tonne in 2010.