MOSCOW – Lukoil and Russian Railways formed a joint venture and will invest 1 billion rubles (U.S. $316 million) in a grease production plant expected to stream in June 2012 in Volgograd, Russia.
The plant will produce greases for rail transportation, oil exploration and production, metallurgy, and the machine building industry, as well as greases for general purposes, both companies said.
LLK International, Lukoils lubricant arm, and the state Russian Railways (RZhD), the countrys railway monopoly, forged the grease production partnership, named Intesmo, in 2009. Under the agreement, Lukoil holds 75 percent of shares of the project while RZhD holds 25 percent shares.
Houston-based FMC Technologies Inc., together with Lukoil’s project-developer, will provide technologies for the design, building and operation of the new facility. The plant site is near Lukoils Volgograd refinery.
The plant will constantly supply RZhD with high-quality greases, and will work on improvement of the greases market in Russia, Oleg Paramonov, Intesmos general director told the RPIs November Lubricants Russia Conference.
The plant is expected to produce up to 30,000 metric tons per year of greases, and by 2015 it plans to meet up to 50 percent of Russias total lithium grease demand. Sixty to 70 percent of the plants production is meant for the Russian Railways, while 30 to 40 percent of the plants production will go into other industries, including LLK Internationals dealer network, Paramonov said.
In accordance with the optimization of the projects costs, meeting the greases supply obligations to RZhD, and hastening the process of obtaining all necessary state licenses, the joint venture already produced 5,000 tons of greases using the Lukoils Volgograd refinery. Around 700 tons of it was exported, Paramonov noted. Intesmo also is expecting to become a member of the European Lubricating Grease Institute.
At the moment Railway transport consumes 28 percent of the countrys total grease production, according to the company. Metallurgy consumes 36 percent, machine building and metal processing consume 11 percent, while oil exploration and production consume 13 percent of the countrys grease production. The rest of it goes to other industries.
The average grease demand in Russia until 2008 was around 71,000 tons. As a result of the recession the demand slumped to around 58,000 tons by 2011, Paramonov said, adding that the plant will compete with imported grease production, which now accounts for 30 percent of the Russian greases market. The most prominent grease importers in Russia are Castrol, Chevron, ExxonMobil, Agrinol, Azmol and Shell.
Lukoil is Russias biggest lubricants producer and holds 29 percent of the countrys automotive lubricants market. The company sells its finished products in more than 30 countries around the word. Lukoil at the moment is actively promoting its finished products in Eastern Europe, Turkey and Middle East.
RZhD operates more than 86,000 kilometers of railway carrier routes and has the worlds second largest railway network, exceeded only by that of the United States.