The 4.8 billion rubles (U.S. $53.1 million) project will construct a factory with capacity to make 100 million liters (90,000 metric tons) per year of finished lubricants and greases as well as other car care products.

The plant will be located at the Novocherkassk Industrial Park near Rostov-on-Don. The governor said that all new residents of the special economic zone will get income tax break for five years.

Chayka said the first phase of the project includes a 1.2 billion rubles investment and should conclude in 2027 when a 20 million t/y lubricants production will be opened.

The facility is expected to employ a workforce of 100. Besides the production complex, the facility should include a modern lab, warehouses and logistic capacities.

According to some estimates, around half of approximately 650 million liters of the annual automotive lubricants demand in Russia was covered by imports or domestically made Western brands such as Shell and Total. All major Western lube marketers exited Russia in 2022 to protest its invasion of Ukraine. The Western additives suppliers also left the market. Since late 2022 several smaller players have opened or are building lubricant blending operations in Moscow, Saint Petersburg and the regions surrounding Moscow, such as the heavily industrialized Kaluga region or in Volgograd.

All of these players hope to capture a portion of the lucrative market once held by the products of Shell, Total and ExxonMobil. The Russian official from the government and the refining industry dubbed such efforts as “import substitution.”

Following this policy, Lukoil recently broke ground on a new grease, metalworking fluids, and lube additives plant in Volgograd, industrial center and the capital of the Rostov’s neighboring region of Volgograd oblast.