Russia Lube Volumes Inch Up


Lubricants production in Russia is expected to grow 2 to 3 percent by 2016, driven by automotive and industrial growth, introduction of higher quality oils and increased petroleum production, a market study found.

Russias economy and its federal budget have always relied on its crude and petrochemicals production, the Moscow-based Discovery Research Group (DRG) found in its recent study, Market Analysis of Petroleum Oils in Russia: Motor, Industrial and Transmission Oils.

An integral part of this production is the manufacturing of lubricants. In 2012 the country produced 1.46 million tons of lubes, and motor oils held the biggest share, accounting for 43.5 percent, or 634,000 tons of the total volume, DRG said to Lube Report on Tuesday.

In 2012 Russia produced 622,000 tons of industrial oils and 54,000 tons of transmission fluids, according to DRG. In the last few years we observed industrial oil demand growth driven by the countrys growing industrial production – in particular, in the metallurgy industry for production of alloyed materials.

Last year industrial oils accounted for 42.6 percent of the total oil market, followed by hydraulic oils (5.2 percent) and power generation [turbine and gear] oils (5 percent). In 2012 transmission fluids held 3.7 percent of the total lubes market.

Last year the production of motor oils dropped by 50,000 tons compared to 2011, when 684,000 tons of motor lubes were produced. The breakdown of engine oil in 2012 is the following: diesel engine oils amounted to 418,000 tons, followed by gasoline engine oils (203,000 tons) and aviation oils (13,000 tons), said DRG.

The consultancy also found that imported motor oils in Russia in 2011 held a bigger share compared to the motor oils produced in the country. In 2011, imported oils accounted for 58.7 percent of the total sales volume in the country, or 4 percent more than in 2010. Imported motor oils have seen growth in 2012, DRG said.

Last year Russian companies held 41 percent of total motor oil sales, and imports accounted for 59 percent. The biggest motor oil marketers in the country are oil majors Lukoil, Rosneft, TNK-BP (acquired by Rosneft earlier this year), as well as Delfin Group, an independent lube producer. The biggest importers are Shell, ExxonMobil, BP, South Koreas SK Lubricants and Frances Total.

In 2012, Russias domestic consumption of motor oils accounted for 53.3 percent of the total volume, while the rest (46.7 percent) was exported. We observed a similar situation in 2011, and a conclusion can be drawn that the Russian motor oil market relies heavily on export, which is a very attractive [driving factor] for the countrys lube manufacturers to develop their trade business, DRG said.

Lukoil is the biggest lubricants marketer in Russia and produced almost half of the countrys total lubricants and base oils. It was followed by Rosneft and Gazprom Neft, which are state oil giants, and then TNK-BP, Bashneft and Russneft.

DRG also found that after the United States, China, India and Japan, Russia is the worlds fifth biggest lubricants market. Analytics say that the Russian lubricants market is experiencing favorable times. We expect the market to grow 2 to 3 percent by 2016 and for this trend to continue to 2020, DRG said.

At the moment Russian producers are trying to apply new technologies in production of lubricants. In the motor oil niche, synthetics are experiencing demand growth, while the sales of mineral motor oils are dropping.

Some trends could constrain the growth of lubricants production in Russia, DRG said. There are a few factors that constrain this development, such as lower crude oil market prices and the obsolete [lubricants and base oil] production capacities, many of which were built in the 1950s, DRG said, adding that in 2013 it expects a 5 percent slump in motor oil consumption, as a result of the slower demand for diesel engine oils.

Finally, the biggest problem impacting the countrys lubricants production is the proliferation of counterfeit products on the market. The more popular an engine oil brand is, the more it is prone to bogus production. This also applies to the cheaper domestic brands too, DRG said.

The Discovery Research Group market study can be purchased at

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