LONDON-Russian base oil production rose 12 percent in 2003, while domestic consumption fell. Attractive prices in the international base oil market make it more profitable for Russias refiners to export their oils around the world.
Five million tons is the nameplate capacity of Russian base oil plants, Igor Krylovski, deputy head for lubricants and specialties at Lukoil, told the ICIS-LOR World Base Oils Conference here Feb. 20. But that figure overstates capacity. Three and a half million tons is more realistic.
The key trends in Russias lube market, Krylovski said in his update on Russian base oils, are production increases for export and consumption decreases due to longer drain intervals, improved technology and greater efficiency on the part of end users.
Total base oil production in Russia was 2.75 million metric tons in 2003, a 12 percent increase from 2002, he continued. Lukoil, the worlds seventh largest lubricant manufacturer, produced 1.22 million tons of base oil, or 44 percent of the total, at its three base oil refineries in Perm, Volgograd and Nizhnii Novgorod. Yukos produced 413,300 tons at two refineries; TNK produced 357,800 tons at three refineries; Slavneft produced 330,400 tons at two refineries; Sibneft produced 357,800 tons in Omsk; and the independent Ufa refineries together produced 195,500 tons.
Looking at production growth by company from 2002 to 2003, Lukoil was the leader with a 16 percent increase; Yukos production increased 15 percent; the Ufa refineries were up 12 percent; Sibneft increased 11 percent; TNK was unchanged; and Slavnefts production decreased 9 percent.
Lukoil is also the leader in finished motor oil production, the Lukoil executive said, with about 55 percent of the countrys total production of about 1 million tons. Yukos and Sibneft each produce around 15 percent of Russias motor oil.
In the export arena, Lukoil has a commanding lead over the other refiners. Export of base oils is our specialty, Krylovski noted. Lukoils exports made up about 77 percent of Russias total base oil exports in 2003.
Lukoils exports of base oils and finished lubricants together grew 40 percent from 2002 to 2003, from less than 400,000 tons to about 560,000 tons. Markets that showed most significant growth included Germany and northwest Europe, the U.S. Gulf Coast, Southeast Asia, China and Mongolia, and the Baltic States.
Krylovski noted that Lukoil is the first refiner in Russia to produce high-quality API Group III base oils, using ChevronTexaco technology at its Volgograd refinery. In 2003, small volumes were used internally in Lukoils finished lubricants, replacing imports, Krylovski said. But we will begin to export Group III base oils in 2004.
Lukoil has also invested in hydrocracking, Krylovski concluded, and will begin production of Group II base oils at the Perm refinery in 2005.