Lukoil Bullish on Future


MOSCOW – Russian oil major Lukoil plans to add API Group II and III base oil capacity, begin lithium grease production through a joint venture and develop its marine lubricants business in the coming years, a company official said here earlier this month.

The company still claims strong leadership in the Russian lubricants market, Maxim Donde, general director of LLK International, Lukoils lubricants arm, told the RPI International Lubricants Russia Conference on Nov. 9. Although our primary focus is the Russian market, we also expect to expand our export volumes.

The volume of Russian lubricants produced in 2011 remained the same as in 2010, as the demand for synthetic and semi-synthetic lubricants rose, while the demand for GOST Russian specification lubes diminished, according to Donde, who did not cite specific demand numbers.

Demand for synthetic and semi-synthetic lubricants in Russia is expected to rise around 6 percent per annum in the coming years, Donde said, with the assortment of domestic products getting bigger. Russian producers will actively compete with foreign companies imports.

By 2020 Lukoil plans to increase its Group II and Group III base oil capacity by more than 50 percent. By 2015 we expect our Volgograd plant to produce up to 265,000 tons of Group III base oil, said Donde, adding that 350,000 metric tons per year of new Group II and II+ capacity will come on stream at the Perm refinery by 2021.

Lukoils 30,000 t/y hydrocatalytic complex in Volgograd is today the only plant in Russia that produces Group III base oil.

The company is set to enter a new lubricants venture, forged in late 2009 with the state transportation company Russian Railways (RZD). In a joint venture with RZD, LLK in 2012 will start production of lithium greases in a new plant scheduled to be open in June, Donde said. The plant is expected to produce up to 30,000 t/y of greases, and by 2015 it plans to meet up to 50 percent of Russias total lithium grease demand.

Positive economic indicators bode well for the lubricants industry. Russias gross domestic product is expected to grow around 4 percent in 2011, compared to the year before. Metallurgy and machine building are expected to grow 5 and 12 percent, respectively.

Manufacturing is expected to rise more than 5 percent. The biggest growth is in the transportation sector. By 2011 passenger vehicle production is expected to rise 54 percent, and light commercial vehicles and heavy duty truck production could rise 45 percent, Donde said.

The Russian passenger car fleet in 2004 had about 24 million units, and in 2010 it totaled about 34 million units. This is 40 percent growth over this period, or 7 percent per annum, Uwe Brueckner, Evonik Oil Additives customer relations manager for the European region, told the conferences opening panel. If this passenger car growth continues, we expect the Russian lubricants market to grow up to 2.1 million tons by 2014.

Lukoil is Russias biggest lubricants producer and holds 29 percent of Russias automotive lubricants market.

The company sells its finished products in more than 30 countries around the word. Lukoil is actively promoting its finished products in Eastern Europe, Turkey and Middle East. Depending on the particular country, we expect sales growth in these regions in 2011 to [range] from 20 to 40 percent, compared to the year before, Lukoils Donde noted.

Mongolia and Afghanistan are the latest markets where Lukoil started to sell its lubricants. However, in 2011 we have seen record sales growth in Turkey, he said, adding that since 2009, when the company opened its branch there, its sales grew by three times. Lukoil today holds a 4 percent share of Turkeys fast-growing lubricants market, and in the next three years we expect to cover up to 10 percent of the countrys lube market.

The company recently opened its Western Europe representative office in Amsterdam, Netherlands.

Donde pledged that company will continue to develop its marine lubes business, which was started in 2008 and now has a 2 percent share of the worlds marine lubes market. We are the only company in Russia that has approvals for its lubes from the leading ship engine producers, he said. Our marine lubricants are produced in 17 countries and sold to ship owners in more than 50 ports in 54 countries worldwide.

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