The former Lotos Oil sold 92,927 metric tons of finished lubricants last year, up from the 77,243 tons sold in 2020, by increasing sales in the automotive segment, according to the company’s latest operational report. Last year, the company sold 167,361 tons of base oils, compared with 180,153 tons in 2020, and it is set to revamp its base oil production in Gdansk.
Those results preceded Lotos’ merger with another Poland-based oil company, PKN Orlen, which closed Aug. 1. As the deal was structured, Orlen acquired Lotos.
“In 2021, the company’s commercial activities focused on strengthening sales in the automotive segment, with particular emphasis on increasing share of synthetic and semi-synthetic oils for passenger vehicles,” Lotos said in the report.
Base oil and lubricants are among the company’s main export products. In 2021, exports accounted for almost 58,000 tons of total finished lubricant sales. For base oils, exports made up a much bigger share in total sales, or 158,000 tons. For both product categories, the remainder was sold in the domestic market.
The company identified several factors for its profitable year in the lubricating oils business:
“Availability and prices of raw materials, such as base oils and lube additives, delays in maritime transport and increases in freight rates. On the motor oils, we further strengthened the relationships with distributors and automotive wholesalers, as well as stepped up direct sales, supported by effective marketing campaigns.”
In the industrial oils segment last year, the company “made changes in the sales structure from low-margin bulk products to more advanced products generating higher unit margins.”
Lotos Oil is in a process of modernization of its base oil production unit in Gdansk, set to stream 400,000 tons of “high margin Group II and Group III base oils with planned commissioning for the first half of 2025.” The refinery’s current capacity is 266,000 tons of Group I base oils.
The prime contractor for construction of the new base oil plant is Italian Kinetics Technology.
“The project will enable the launch of production and sales of high-margin Group II and III base oils,” Lotos said. “The scope of the project includes the construction of a hydrocracking plant using catalytic dewaxing and hydrogenation processes, feedstock and product tanks, inter-process pipelines and a power supply station.”
The plant will also produce tens of thousands of tons of fuel intermediaries, it added
Lotos Oil said it was investing in this project because “the Group II base oil product is valued higher than diesel oil and sought after both on the European and global markets.”
“In the second and third quarters of 2021 there was a significant global year-on-year increase in prices of base oils, traded with a premium to diesel oil, due to the limited availability of the products caused by the lower utilization of the refinery capacity in 2020,” Lotos said.
The company’s primary motor oil product lines include Aurum-, Hybrid- and Quazar-branded premium synthetic oils for passenger cars. It also offers Thermal Control-branded mineral, semi-synthetic and synthetic oils for passenger cars and Turdus-branded mineral, semi-synthetic and synthetic oils for heavy-duty trucks. Its line of industrial oils includes Hydromil-, Transmil-, and Remiz-branded products for hydraulic, turbine and machine oils application.
It also offers various types of industrial lubricants.