War Impacts Ukraine Blenders


War Impacts Ukraine Blenders

As Russian forces continue to batter Ukraine, it’s no surprise that Ukraine’s lubricant industry is being impacted. Manufacturing plants in proximity to fighting have evacuated staffs and halted operations, but facilities located away from these zones are operating normally, an industry source said.

Moscow-based consultant Artem Mazaev says some Ukrainian lubricant producers are halting operations due to fighting.

The country depends largely on imports of base oils as well as finished lubes and other petroleum products. The invasion has made supply of those materials precarious, though the impact has been lessened by the war’s upheaval.

Ukraine is among the top 10 lubricants markets in Europe, and the country is home to several large and mid-size lubricant and grease makers: Agrinol and Azmol-British Petrochemicals are in the port city of Berdyansk on the Azov Sea, one of a number of coastal cities and towns that have avoided fighting but which are now occupied by Russian forces, according to news reports.

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Yukoil, which claims to be the country’s largest motor oil supplier, is in Zaporizhia, location of a nuclear power plant that Russian troops seized last month. Media reports say Russia maintains control of the nuclear plant but not the city. Grom-Ex is a small producer in the northeastern city of Kharkiv, site of some of the heaviest shelling by Russian troops.

Grom-ex officials confirmed to Lube Report last week that its plant had shut down because of the attacks on the city. The other companies have not responded to inquiries.

“Those facilities that are far away from the military operations continue to produce finished lubricants and industrial liquids, while those enterprises located in close proximity to or in places of the combat operations are closed,” Artem Mazaev, a Moscow-based consultant to the lubricant industry, told Lube Report last week.

The consultant predicts a 10%-15% slump of the lubricant demand in Ukraine in 2022. “This depends how deep Putin will go with his plans and what aims he wants to achieve,” Mazaev said, referring to Russian President Vladimir Putin.

Ukraine was once one of the 10 largest finished lubricants markets in Europe but has shrunk in recent years, especially after 2014 when Russia seized control of the Crimean Peninsula and helped part of Ukraine’s eastern Donbas region try to break away. The market consumed an estimated 350,000-400,000 metric tons of lubes before that conflict began, but Azmol-British Petrochemicals officials estimated last year that demand was down to 200,000 t/y. Industrial output in the country has suffered due to the eight-year military conflict as well as corruption.

Ukraine’s main fuels refinery is operated by Ukrtatnafta in the central city of Kremenchuk and houses the country’s only base oil plant. In 2015 it stopped using Russian crude oil for feedstock and has since relied on crude from the North Sea and Azerbaijan, both of which are shipped to Odessa and then transported by pipeline.

Otherwise the country depends on imports from a variety of countries, including Russia, for supplies of base oils, finished lubricants and other petroleum products, according to Amy Claxton, of U.S. consulting firm My Energy.

“Supply disruptions were common before [the February] invasion,” Claxton said. “Now the situation is in disarray. There is nil base oil impact as Ukraine demand has come to a standstill.”

The Ukrtatnafta refinery has capacity to process 360,000 barrels of crude per day but has operated at approximately half that rate for the past several years.

“Control of the Port of Odessa is critical for Kremenchuk refinery operations,” Claxton said.

Azmol-British Petrochemical has capacity to make 100,000 t/y of greases and 125,000 t/y of fluid finished lubricants. Agrinol claims capacity to produce 50,000 t/y of finished lubricants and 30,000 t/y of greases.  The annual output of Grom-Ex’s blending plant is about 7,000 tons of finished lubricants.

Image by Lianez

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Europe    Finished Lubricants    Market Topics    Region    Russia    Ukraine