Base oil production by Lukoil fell 7% last year, while its finished lube output increased 2%, partly driven by its acquisition of Shell’s former business in Russia, according to its annual performance report.
The company, which is headquartered in Moscow, produced 797,000 metric tons of base oils last year, compared to 856,000 tons in 2021. It attributed the decrease to the country’s slow recovery from the COVID-19 pandemic and disruptions to logistics and regional energy markets caused by the war in Ukraine and subsequent sanctions against Russia.
Lukoil is Russia’s largest producer of base oils and lubricants. In 2021 it held around a 30% share of the country’s lube market.
The uptick in Lukoil’s finished lube output – from 646,000 tons to 661,000 tons – was chalked up to increased sales of its premium products and growth in sales of its Teboil-branded products.
In May 2022 Lukoil took over Shell’s retail business in Russia, including the British oil major’s 180,000 tons per year lubricant blending plant in Torzhok, along with its 411 petrol stations across the country. Shell – along with other Western oil majors like ExxonMobil, TotalEnergies and BP – exited the Russian market in protest of Moscow’s military incursion into Ukraine earlier that year.
Lukoil tweaked the ex-Shell blending facility in Torzhok, a small city around 200 kilometers northwest of Moscow, to produce Lukoil and Teboil brand products. The filling stations acquired by Lukoil were also rebranded to Teboil, a Finish oil company Lukoil bought in 2005.
In 2022, the company introduced 112 new products and developed 126 new formulations, Lukoil said in its annual report. In all, the company portfolio now lists 800 types of products.
Lukoil’s finished lubricants are produced at nine facilities in Russia and abroad. Russian blending plants are located at refineries in Perm and Volgograd, as well as in Tyumen, Finland, and Torzhok. The company also operates lubricant blending plants in Hamina, Finland; Vienna; Ploesti, Romania; Izmir, Turkey; and Almaty, Kazakhstan.
The Volgograd refinery has capacity to produce 270,000 t/y of API Group I, 220,000 t/y of Group II and 30,000 tons of Group III base oils. In Perm, Lukoil’s base oil plant has capacity to manufacture 480,000 t/y of Group I base oils.