Powering ahead

Umongo Petroleum is a leading distributor of additives, base oils and other related petroleum

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Umongo Petroleum is a leading distributor of additives, base oils and other related petroleum, oil and lubricant products in South Africa and sub-Saharan Africa, and is led by the CEO, Boston Moonsamy

In 1998, the American-based Chevron Oronite Company LLC (Chevron Oronite) appointed African Petroleum Additives Proprietary Limited (APAC) to represent them as an agent in South Africa, servicing the requirements of the lubricant and fuel marketers with Chevron Oronite lubricant and fuel additives.

In 2005, Umongo Petroleum Additives Proprietary Limited was established as a distributor of Chevron Oronite for South Africa and sub-Saharan Africa. Umongo Petroleum diversified its business activities to also include distributor agreements with Chevron Products Company U.S.A. Inc. (Chevron Products Company), BASF SE (BASF) and Evonik Oil Additives GmbH (Evonik). This led to the change of its name to Umongo Petroleum Proprietary Limited.

Umongo Petroleum is based in Umhlanga Ridge, KwaZulu-Natal, and operates a fully outsourced supply chain and logistics business model, using accredited storage facilities, transporters and other related service providers to import, store, process and deliver raw materials and finished products to customers. In addition, Umongo Petroleum offers a full range of technical support to customers that use the product range.

Umongo Petroleum acquired 100% of Orbichem Petrochemicals Proprietary Limited (Orbichem), the distributor of the Ergon International, Inc. (Ergon) range of products in South Africa and sub-Saharan Africa. Umongo Petroleum is an ISO 9001 accredited company and the preferred SARS customs clearing agent for imports and exports.

Umongo Petroleum has supply and distribution agreements with various entities in the Chevron Group, a leading integrated energy company, for the supply of both additives (from Chevron Oronite) and base oils (from Chevron Products Company) into the South African and sub-Saharan Africa markets.

Omnia’s chemicals division, operating under the Protea Chemicals brand (“Protea Chemicals”), has a wealth of experience and a reputation for excellence in the distribution of speciality, functional-effect chemicals and polymers in sub-Saharan Africa and in countries such as South Africa, Namibia and Kenya.

Umongo Petroleum is a market-leading business, which is complementary to Protea Chemicals and which will contribute to its product and market strategy. The addition of a bulk volume base oil, additive and lubricant business to Protea Chemicals, will broaden its current product offering and create new opportunities to grow the business in South Africa and sub-Saharan Africa. Umongo Petroleum’s increased sales activity resulted in an increase in its import activity and Umongo Petroleum went from importing from just one country and one port to importing from 11 countries and 14 different ports.

Boston Moonsamy – Chief Executive Officer, Umongo Petroleum

How did you manage to transform the business into what it is today?

The principles on which Umongo Petroleum was built is far from groundbreaking. Understanding the market is key in any business in order to adequately satisfy the needs of your customers. The only way to understand the market is to build lasting, reliable relationships with both customers and suppliers. The principle on which Umongo Petroleum as a business is sustained is what sets us apart. At Umongo Petroleum, we recognise that the only way these relationships are built is through the people. Understanding the people has been the key step that’s designing what has become a self-sustaining process.

What are some of the core services you offer?

Umongo Petroleum supplies high-quality lubricant additives and base oils to the lubricant market. We supply lubricant marketers with the complete solution to grow and maintain a successful business. We are a “one-stop shop”, offering supply chain and logistics support, which plays a major role in meeting and exceeding the expectations of our customers. We supply everything from the ‘ingredients’ (additives and base oils) to the ‘recipe’ (formulations and technical support)—providing each customer with tailored solutions according to their requirements.

What are some of the challenges (operational and security) in transporting various lubricant additives and base oil?

The biggest challenge in the industry is being able to offer customers the comfort of security of supply. In a market where our products are largely imported, proper planning and execution are imperative. Failure to pre-empt the needs of our customers could lead to the loss of business or worse, the loss of faith in Umongo Petroleum to deliver. Most of these and related challenges are overcome by preserving open lines of communication on both ends of the supply chain, thereby upholding good business relationships all around.

What is your vision for Umongo Petroleum? And tell us more about the meaning of the name.

‘Umongo Petroleum’ is a Xhosa word meaning “bone marrow” and certainly epitomises our role in the petroleum industry. Similar to the “marrow” being regarded as the core element in a bone, so, too, are the petroleum additives, which enhance the features and characteristics of lube oils and fuels.

The vision for Umongo Petroleum is in line with that of the Omnia Group, of which we are a member, to make use of our extensive knowledge base and our growing relationships with customers to provide the right products, technology and solutions to become market leaders in the petroleum industry.

Lionel Higgo CA (SA) – Chief Operating Officer, Umongo Petroleum

What are some of the latest developments in component additives and what benefits therein?

The purpose of a lubricant additive is to enhance the performance characteristics of the base oil. Additive packages are specifically formulated to achieve optimal performance, depending on the desired application. Additive companies are faced with the challenge of considering the delicate balance between fuel economy and emission regulations when designing new additive packages.

This, in addition to meeting the requirements of new specifications, has pushed the industry away from using tried-and-tested components that are environmentally undesirable in favour of new, innovative technologies.

What are some of the other products and services that you offer at Umongo Petroleum?

We cater for a wide range of speciality products and chemicals required within the petrochemical and industrial sector, which includes brake fluid, MEG, bitumen and a variety of greases.

We continuously strive to expand our speciality and chemicals portfolio with innovative products to cater to the needs of our customers. At Umongo Petroleum, we also have our own in-house clearing and forwarding department.

Mr Wayne Koonin – Group Finance Director, Omnia Group

Your year-end company results were impressive. What has been the key to Omnia’s financial success?

Omnia’s business is reasonably diversified across different segments, products, geographies and currencies and this creates a counter-balancing effect across the different business units. Coupled with this are all the internal processes we use to manage the business and ensure we take the necessary steps to counter changes in the underlying markets and industries we operate in. Managing our raw material purchasing, foreign exchange hedging and operational efficiencies are critical to ensuring that we achieve our gross profit margins, which is a critical driver in determining our overall performance. Overhead and cost management is another key focus area that we keep a close eye on. In terms of the current year, our operating profit was very close to a 50:50 split between South Africa and non-South African entities, which is a critical factor, especially as the South African economy has been very slow, particularly in manufacturing and mining, which are important industries for us.

Why did Omnia Holdings decide to invest in Umongo Petroleum and how do the two companies overlap and enhance each other’s performance?

Protea Chemicals is a long-established business in the industrial chemical space and has been part of Omnia for years. The Protea Chemicals business focuses principally on industrial and speciality chemicals and covers almost all aspects of the economy. However, there was one piece of this puzzle that was missing. Umongo Petroleum specialises in base oils, additives and lubricants, which Protea Chemicals did not have a presence in and, therefore, through the acquisition, this created a natural fit that complemented our existing portfolio. In addition, Omnia has been operating in Africa for many years and has a good understanding of doing business on the continent. Umongo Petroleum has a relatively small exposure beyond South Africa and this presents an area of growth beyond its core market in South Africa. Representing Chevron Oronite and Chevon Products Company in South Africa and various countries in Africa creates a lot of synergy within Protea Chemicals and the greater Omnia Group. So, overall, there are a number of points of synergy that benefit both Omnia and Umongo Petroleum.

Funani Mojono – Managing Director, Protea Chemicals

What are some of your core responsibilities and some of the challenges and opportunities when doing business in Southern Africa?

As a division within the Omnia Group, we are expected to contribute meaningfully, both strategically and financially. It’s my responsibility to ensure we deliver trusted performance through innovative solutions to build a better world. Doing business in South Africa is always challenging but with these challenges come new opportunities. There are currently various opportunities to concentrate on in the market and they give us the ability to maybe move away from a product-based to a solution- or service-based business. 

What are your outlook/goals for 2018 for your company and the economy in general? Any exciting new projects on the cards? 

Our goal is to grow by utilising the Omnia Group’s reach in sub-Saharan Africa. Both companies represent some of the best businesses in the world, offering a product range that meets most of the customers in Africa’s needs, and we want to build on this, offering Africa the best the world has to offer. Omnia currently has manufacturing facilities in 34 countries, a presence in 50 countries and distributes and sells in 85 countries around the world. A lot of what we are looking at is intensifying the collaboration with the Omnia Group through the #better campaign.

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