LLK International, Russia’s biggest lubricant marketer, signed a contract for lubricants supply with the Afghan Ministry of Defense, Russian state news agency RIA Novosti reported last week. As a platform for expansion in the region, the company plans to use its future blending plant in the south of Kazakhstan.
LLK is Russian oil major Lukoil’s lubes arm.
The meeting between LLK officials and Afghan government representatives took place on Feb. 26 in Kabul. Afghan officials present for the signing ceremony included General Mohibullah, who is deputy defense minister, Transportation Minister Daoud Ali Najafi, Energy Minister Ismail Khan and other government and business representatives such as the head of the Kabul chamber of industry and trade, according to RIA Novosti.
All Afghan participants confirmed that the country is open to the Russian oil major’s expansion in the Afghan market.
“According to Lukoil’s business strategy, our company’s priority is to expand in the markets of Central Asia and the Middle East,” LLK’s commercial director Alexey Strelchenko told the meeting, the news agency reported.
Lukoil made its first efforts to come to the Afghan lubricants market in 2011. But because of the difficult economic situation of the war ravaged country, the company’s sales have seen a downward trend. “Recently the situation is changing, and Lukoil now observes growth of [lubricants] sales in Afghanistan,” Strelchenko said.
To satisfy the constant lubricants demand growth in the countries of Central Asia and the Middle East, he continued, Lukoil is planning to build a huge lubricants blending complex that will be located in the south of Kazakhstan.
“The 100,000 tons per year lubricants plant will produce motor and industrial oils and is slated to make up to U.S. $200 million of annual sales. To realize this plan, Lukoil will invest about U.S. $100 million,” Strelchenko said. He added that Lukoil’s presence in the region demonstrates not only the development of trade and economic cooperation among the countries, but it strengthens the presence of Russia in the region.
LLK markets more than 500 different brands of lubes and greases. In 2012, the company sold 325,000 tons of packaged lubricants, up from 220,000 tons the year before. It sells finished products in 35 countries. LLK operates four blending and base oil plants in Russia and three blending plants in Finland, Romania and Turkey.
Lukoil claims a 40 percent share of Russias lubricants market, and in 2011 it produced 1.2 million tons of base oils and lubricants.