Lanka Indian Oil Corp is also offering its big tank farm in the eastern port of Trincomalee to store liquid cargo for other companies.
Lanka IOC managing director K Ramakrishnan said the firm is offering a five percent discount on lubricants till end-October.
The move comes as crude oil prices have fallen off historic highs and competition is growing in the local market.
"We have a lube oil blending plant in Tincomalee so we can afford to sell at cost," Ramakrishnan said.
Before the plant was commissioned last November, LIOC was importing lubricants from India and selling in the local market, dominated by Chevron Lubricants Lanka, formerly known as Caltex Lubricants Lanka.
In June 2008, the Sri Lanka unit of Chevron Lubricants, a former government monopoly which still dominates the market, raised prices sharply in response to rising crude prices.
The lubricant market is becoming increasingly competitive with a local auto gas firm Laugfs Holdings introducing its own lubricants to the market in July.
Ramakrishnan said LIOC's lube costs had come down now that it was manufacturing the product in the island.
"A cost reduction is possible. We'll be selling at no loss - no gain in these two months after which prices will be back at August levels," he said.
"We want to expand our market share which is now 17 percent."
Ramakrishnan also said the firm is offering the use of its big storage facility in Trincomalee to store the liquid cargoes of other firms.
"We have been talking with other companies to use our storage capacity in Trinco. If anyone wants to use it to store any liquid cargo, especially petroleum products as buffer stocks, we can look at it."