MOSCOW – Russias lubricant market faces modest recovery in 2010, but due to the economic downturn lubricant demand contracted so heavily in 2009 that some base oil plants have halted operations.
Speaking at Lubricants Russia 2010 conference held here last moth, InfoTeks general director Tamara Kandelaki said that Russias motor oils demand in 2009 declined 23 percent compared to the year before. Unlike the other developing economies (China for example) that reported one-digit demand growth, Russias lubricant market experienced a huge decline in 2009.
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She added, Its the lowest level in the last five years, and demand wont reach the pre-crisis level in the next two or three years.
Russias total lube demand in 2009 stood at 1.3 million tons, a 13 percent decline compared to the year before, Kandelaki said. The countrys motor oil demand last year stood at 768,000 tons, down from 996,000 tons in 2008. Industrial lubes demand in 2009 was 583,000 tons.
Her presentation included a 2009 balance sheet of the countrys base oil and lubricants market. Vertically integrated oil companies in Russia last year produced 2.4 million tons of base oils and finished lubricants, according to the study. More then half of the refineries lubes production has been exported, about 1.3 million tons, including base oils (slightly above 1 million tons), motor oils (183,000 tons) and industrial lubricants (42,000 tons).
The rest of the oil majors 2009 lubes production, or 1 million tons, was sold on the domestic market, it includes 460,000 tons of automotive lubricants and 457,000 tons of industrial oils.
InfoTek found that Russian independent lube marketers in 2009 produced 164,000 tons of finished lubes, primarily motor oils exports (23,000 tons), while domestically they marketed around 140,000 tons of automotive and industrial lubes (80,000 tons and 60,000 tons respectively).
Due to the regained confidence in 2010, Russian consumers are increasingly attracted to buy quality products. In 2009 and 2010 we conducted surveys that pointed to only two key elements: quality and price, Kandelaki said. Over 70 percent of the respondents in 2009 said price was a key factor in choosing certain lubricants. The situation has been changing now. This year over 35 percent of the respondents, more than in 2009, have chosen quality as a main factor when buying lubricants.
Kandelaki emphasized that prospects for stabilization of export volumes would look brighter if the government adopts the right policies regulating the export of crude oil and petrochemical products.
Finished lubes imports have been hurt by the 2009 crisis as well. ExxonMobil, the biggest foreign marketer in Russia, lost 21 percent of its market, compared to the year before. Total finished lubricants imports last year stood at 223,000 tons or more than a 20 percent drop compared to 2008, Kandelaki said. Shells sales last year contracted 18 percent, compared to 2008, while BPs have increased only 2 percent.
Russias biggest automotive lubes marketer in 2009 was LukOil, according to InfoTek. It held a 28 percent market share, followed by Rosneft with 18 percent markets share. TNK-BP is third, with 15 percent share of Russias automotive lubes market, followed by ExxonMobil (7 percent), Shell (6 percent) and Gazprom Neft which in 2009 held only 5 percent share of countrys motor oil market.
Base Oils Prospects
Russias current total mineral base oil capacity is around 3 million tons per year, according to Oleg Tsvetkov, head of the oils department of All-Russia Research Institute of Oil Refining. At the moment there are eleven operational base oil plants in the country, he said. Of those eleven, two base oil plats are not operating: TNK-BPs Ryazan 275,000 ton per year API Group I base oil plant recently has been shut down, and Tatnefts Nizhnekamsk 10,000 t/y Group IV polyalphaolefin plant recently halted its production. He hopes that that these are temporary measures of those base oil producers.
Tsvetkovs institute found that modern base oil refining technologies have been introduced by few selected producers. Flowing and oscillatory selective treatments have been introduced on Rosnefts Novo-Kuibyshevs plant and Slavnefts Yaroslavl plant. New contact devices in selective treatments have been introduced on Bashnefts Novo-Ufa plant, Tsvetkov said. In addition, effective hydrotreating has been introduced in Rosnefts Angarsk plant, and LukOil recently introduced high quality Group III+ at its Volgograd plant.
The Institute made optimistic estimates of expected volumes for Group II through IV base oils coming on stream by 2020 for the following producers:
– Rosneft, 660,000 t/y
– Taneko, 190,000 t/y
– Slavneft, 100,000 t/y
– LukOil, 600,000 t/y
– Tatneft, 10,000 t/y