TBY talks to Hojjatollah Amani Dowlatsara, Managing Director and Member of the Board of Behran Oil.
TBY What is the history behind Behran Oil, and how long have you been with company?
HOJJATOLLAH AMANI DOWLATSARA The company was first established as a joint venture between a syndicate of Iranian investors (75%) and Esso (EXXON) Oil Company (25%) in 1963. I started working in this company as a lab supervisor when I was 25, and I’ve been working here for 34 years. I have been involved mainly in the technical aspects of the industry, which I’ve specialized in, and have authored several books and articles on lubricants for the guidance of Iranian consumers. I also have an Executive MBA, and have had different management responsibilities in this company.
This is the only company I’ve ever worked for. The reason perhaps is that at the time of Esso, I saw how they gave importance to the recruitment of competent personnel and their training and development, as well as the very advanced technical expertise of the company. After our Islamic Revolution, the relationship with Esso was cut and we tried to maintain the same corporate culture at the company that was renamed Behran Oil. I think that has been an important factor in making us one of the most successful companies in Iran.
How has the company developed over the years?
In 1964 the company established a blending plant for which the base oil was supplied from the Abadan refinery and additives were imported from Western countries and these materials were blended to produce Esso-branded lubricants in Iran. Around 1969, the company established a refinery and produced its own base oil. The original capacity of that refinery was 30,000 tons of base oil per year, all of which was converted to motor oils and industrial oils. After the Revolution in 1979, the products were distributed under the Behran brand.
During the Imposed War between Iran and Iraq, all industries were in the service of defense as well as civil activities, but after the war we went into rapid expansion, and now we are producing 250,000 tons of base oil per annum, as well as 350,000 tons per year of finished products such as motor oils, industrial oils, antifreezes, plus rubber process oils (RPOs), and paraffin waxes. In total, the capacity of our company for the production of finished products is more than 500,000 tons per year.
How does Behran rank in terms of base oil production capacity in Iran?
Today there are five refineries for lubricants in Iran; The first is Sepehan Oil in Esfahan, which is now a semi-private company that has a nominal capacity of 400,000 tons per annum. The second and third refineries belong to Iranol Oil, which are located in Tehran and Abadan, and have a total capacity of 300,000 tons per year of base oils, and the next lubricants refinery (third in ranking from the capacity aspect) is Behran Oil, located in Tehran, with a capacity of 250,000 tons per year of base oil. The fourth refinery is Pars Oil, located in Tehran, with a capacity of 160,000 tons of base oil per year. All in all, Iran has a total base oil producing capacity of 1 billion liters per year, all of which are of the Group I kind.
How much of this capacity is consumed in Iran and how much is exported?
The demand for finished lubricants in Iran is about 700,000 tons per year, so, the surplus [base oil] is exported, mainly by Sepahan and Iranol, and some by Pars. The interesting point is that Behran Oil uses all its produced base oil and also imports about 100,000 tons of Group II and Group III base oils, because it has the largest market share of lubricants in Iran.
Of course, Behran also exports finished lubricants as well as RPOs, paraffin waxes, and antifreeze. In the past, consumers used to change their motor oils about once every 1,000 kilometers, but with the production of higher quality level lubricants (a first for Behran), Iranian drivers now change their motor oil every 5,000 kilometers on average.
Behran’s publications, as well as its technical seminars, have also played an important role in improving popular trust in the quality of nationally produced lubricants and, as a consequence, despite the phenomenal increase in vehicle production in Iran, the consumption of lubricants hasn’t increased at anywhere near the same rate. But when it comes to exports, although Iranian base oils enjoy a great deal of popularity, the finished lubricants have a tough time competing in foreign markets due to the profusion of famous international brands. Of course, Behran has been successful in this field, too.
What sets Behran apart from its competitors in Iran?
The main aspect that sets Behran Oil apart from its competitors is its high brand popularity, which results in a higher market share. As I mentioned before, Behran has to import extra base oils (Group II, III, and synthetic) in order to supply its markets.
What sorts of lubricants are produced in Iran? Is there a need to import the more advanced types of lubricants for modern machinery?
More than 95% of the lubricants that can be produced using Group I base oil are produced in Iran. Although some special greases and synthetic lubricants are imported, many high-quality modern lubricants that need groups II, III, or synthetic base oils are also produced in Iran—mainly by Behran, of course. There are a number of internationally known companies blending famous branded lubricants in Iran, as well as importing their products for sale.
What has been the secret behind Behran’s success, and its strong position in the market?
I believe that it has to do with our management model. Our management doesn’t change much, and we have a high retention rate when it comes to personnel. But perhaps the most important criteria is Behran’s organizational culture. Throughout its history, Behran has been committed to producing quality products and is loyal to its customers. In other words, we have never compromised on the quality of our products to make an extra buck. Our products have the approval of the most creditable machinery manufacturers in the world. On top of all this, we have established marketing technical services (MTS) for our industries throughout the country. Behran has MTS offices in the centers of Iran’s main provinces. In fact, our engineers are dependable consultants for both industry and the public. We also have strong quality control and R&D facilities, which have enabled us to develop the required lubricants. And the versatility of Behran’s products is also an important point. Behran produces more than 1,000 types of lubricants and related products, including different viscosity grades of lubricants and their packaging.
What is Behran’s share in the engine oil market today?
According to official statistics, Behran on its own has a 40-43% share of the motor oil market and a 30% share of the industrial lubricant market in Iran. The company also exports about $40 million in finished lubricants, RPOs, and paraffin waxes.
How will the ending of energy subsidies affect your company?
In the short run the lubricant industry will encounter a slowdown in demand, especially in the passenger car lubricants segment, but not so much in the commercial sector because buses and trucks have to keep running. But in the long run, we expect normal consumption habits to resume. In Iran we will eventually have to produce more fuel-efficient vehicles, so generally, in terms of lubricants, the size of our market will decrease (because of longer oil change intervals), but I think that the increase in the number of vehicles will eventually bring us back to where we were.
What are your investment plans for the future?
We have many projects. We intend to establish a Group II and III refinery, even though the technology isn’t easily available to us. We are trying to find some other ways of getting around this situation. I believe that in a few years you will find that we are producing Group II base oil. We are also studying our participation in establishing a petroleum refinery that would produce fuels as well as other products.
Do you think it was the Esso foundations that gave you the edge that you retained over the years?
To some extent yes. In fact, in the first years after Esso left Iran, the refinery that had been built, the personnel who were trained, and the management and other disciplines that were set by Esso, helped us to continue running the company successfully. Later on, other factors like our R&D center, our benchmarking endeavors, and our participation in international and national seminars and conferences through which we both received and shared our experiences have had more important effects on our success. At the present, our colleagues have regular presentations at the ICIS-LOR international base oil conferences in the Middle East, for example.
Are you involved in any environmental projects?
We are one of the most environmentally aware companies in Iran. We have contributed to environmental protection by increasing the quality level and environmentally friendly formulations of our lubricants and other products. This means higher drain intervals for oils and antifreezes (and so less water and soil pollution), and also longer lifespans for engines, lower emissions, and less air pollution. We have also established sewage and waste treatment systems in our plants. We now convert most of our burning systems from heavy pollutant fuels to cleaner fuels as gas, resulting in cleaner air. We have installed more fuel-efficient electricity generators, and are developing the green space around our plants.
All of this means that we are at the forefront of environmental responsibility. We also utilize energy management systems that involve a lot of energy auditing and modifications to make energy consumption as cost-effective as possible, and produce less CO2. We are in compliance with ISO quality management systems, such as ISO 9,000, ISO 14,000, and ISO 18,000.
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