Avtovaz expects the deal will help it cut costs on its purchase policy and to improve its production expenses, while Rosneft hopes to establish reliable sales channels and prospects for new lubricating materials in Russias automotive and industrial sectors. Avtovaz is the leader of the Russian automotive industry and this deal opens new possibilities for our lubricant production, said Sechin. We strongly hope that it will increase the sales and quality of our products for the end-users satisfaction.

In the last few years Avtovaz has been focused on new car design to compete with foreign brands and car makers operating in Russia. We want to make Lada customers proud again to drive our cars, Andersson said. This partnership is very important for us. Rosneft is the strongest player in the Russian oil market and one of the largest oil companies in the world. We believe it is a guarantee for success.

Togliatti-based Avtovaz reported weak sales in 2013, having sold 535,000 vehicles, or 12 percent less than the year before. Car sales in all of Russia dropped by 5 percent last year, due in part to faltering economic growth. Prospects for this years sales are also dim. Prompted by Russias conflict with the West over the Crimea annexation and the war in eastern Ukraine, an economic recession is looming.

The French-Japanese joint venture Renault-Nissan took over Avtovaz in June. The JV paid $740 million for a 50.1 percent stake in the Lada car maker.

After Lukoil, Moscow-based Rosneft is the countrys second largest lubricants marketer. In 2013 it produced 601,000 tons of lubricants and base oils, and held a 26 percent share of the Russian lubricants market, according to Moscow-based InfoTek consultancy.