ROYAL Dutch Shell plans to build a lubricant-blending plant in Guangdong Province to tap rising demand in southern China, the Anglo-Dutch oil major announced yesterday.

The Zhuhai-based plant will have initial capacity of 200 million liters, or about 200,000 tons, of lubricants a year, when commercial operation starts in 2009, Shell said. Capacity can be doubled, pending market demand.

Shell aims to capture the fast growth of China's auto market, where passenger car sales rose 21 percent in the first five months to 2.57 million units. Lubricant demand in China is mainly driven by car use.

"China is an exciting market, to which Shell is firmly committed," Lim Haw Kuang, executive chairman of Shell's China operations, said.

The Zhuhai plant will add to Shell's five existing lubricant-blending plants in China, including three it acquired with domestic independent rival Tongyi last year. Shell didn't say how much the new plant will cost.

Shell bought a 75 percent stake in Beijing Tongyi Petroleum Chemical Co and Xianyang Tongyi Petroleum Chemical Co in September, which together have 600,000 tons of annual capacity. Shell has a capacity of 200,000 tons in China excluding its stake in Tongyi and the new plant.

The new Zhuhai plant will produce consumer, transport, industrial and marine lubricants. It will blend both Shell and Tongyi branded lubricants, each accounting for about 50 percent of production.

Shell regained the top ranking in global lube market share in 2006, surpassing ExxonMobil Corp.