To meet rising demand for higher-quality lubricants, Russian base oil producers are gearing up to add new annual API Group II and III capacity totalling 1.3 million metric tons by the end of 2019, including 590,000 t/y from LukOil and 450,000 t/y from Rosneft.
“LukOil is the leader in every market segment,” declared Maxim Donde, general director of LLK International Lubricants Co. (LukOil’s lubricants arm) at February’s ICIS World Base Oils & Lubricants Conference in London. “Our goal is to balance finished lubricants and base oils.”
LukOil boasts it is well ahead in Russia. The company produces 45 percent of all base oils and has 45 percent of the industrial lubricant market, as well as 29 percent of the automotive market, Donde pointed out. By 2017, LukOil will add 240,000 t/y of new Group III capacity at its Volgograd refinery, he said, and 350,000 t/y of new Group II and II+ capacity will come on stream at its Perm refinery by 2019.
However, LukOil has competition that also is targeting the market for highquality base oils. Rosneft has announced 200,000 t/y of new Group II capacity in Samara and 250,000 t/y in Angarsk, Donde said, while Slavneft also plans 100,000 t/y of new Group III capacity in Yaroslavl, all projected for 2014.
Russia’s main economic indexes are positive, he emphasized: GDP grew nearly 4 percent in 2010 over 2009 (following an 8 percent plunge the year earlier). 2010 saw manufacturing activity rise 12 percent; metallurgy 14 percent; the engineering sector 12 percent and transportation 7 percent.
Most impressively, vehicle production recovered 94 percent, said Donde. After peaking in 2008 at nearly 1.8 million vehicles, production had fallen to 722,000 in 2009, but bounced back to 1.4 million units in 2010. The outlook for passenger car sales is bright, and increasingly led by foreign brands. In 2010, 1.2 million foreign-badged passenger cars were sold in Russia (including both imported vehicles and those assembled there), while sales of Russian brands totaled 550,000. By 2015, sales of foreign brands will double to 2.45 million, as sales of Russian brands slip to just 500,000, the Lukoil executive projected.
About 70 percent of this 1.4 million metric ton market still uses older GOST-standard lubes, but high-spec lubes now hold 30 percent of Russia’s 1.4 million metric ton lubricants market by volume, and account for about 60 percent of its value in monetary terms, he added.
For today’s marketers, “the name of the game is to move to high-spec lubricants without losing the GOST market,” Donde concluded. “Competition [in Russia] is tough and growing tougher all the time.”
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