Lukoil Expands in South Caucasus


Russian lubricant marketer Lukoil expanded its lube sales in the South Caucasus and is confident it can expand production and establish more distribution channels in the region.

The company discussed its aggressive marketing initiative in Georgia, Armenia and Azerbaijan during a regional vehicle dealership convention held earlier this year in Georgia. Our presence here is a result of the dynamic development of the regions respective economies, Alexey Strelchenko, LLK Internationals deputy general director, told convention attendees in remarks LLK later shared with Lube Report. We are looking forward to improving our business, and part of it is our intention to seek new sale channels.

LLK is Lukoils lube arm.

Beginning Oct. 1, Lukoil-Georgia, the companys distributor in the country, started to supply its line of Avangard-branded lubricants to the public bus system of Batumi, the Black Sea seaside capital of Georgias autonomous Adjara republic. The contract is limited to one year with an option for extension. We are continuing with our strategy of expansion with public transportation operators in the Georgian market, Strelchenko said in an Oct. 10 news release.

Batumi Avtotransport is the largest public bus transportation company in Western Georgia, and it uses Chinese and Ukrainian-made busses. In June Lukoil signed a similar contract with a Tbilisi-based minibus bus operator that holds 90 percent of the total public passenger flow in the Georgian capital. Under that contract, the Russian oil major pledged to supply 180 tons per year of Lukoil Genesis-branded products for more than 3,000 2013 and 2014 Ford Transit microbuses.

At the dealership convention, Lukoil confirmed it is studying the feasibility of building a refinery in Georgia. The country is a main transportation hub for Lukoil products shipped to Central Asia and the Middle East.

Lubricant demand in Georgia is around 12,000 tons per year, according to the countrys statistical department. The market relies completely on imports.

Lukoils main lube distribution channel in the country is its wide network of filling stations. In 2013 it realized 85 percent lubes sales growth despite a 28 percent slump in Georgian lubricant demand. It is also the principal lubricant supplier for police agencies in Georgia, along with the country’s defense ministry. Lukoil also supplies aviation oils to an airplane manufacturing plant and industrial oils to a few hydro power generation plants.

Lukoil relies on the country’s growing car population which has been growing at an average rate of 10 percent. Georgias car park numbers 800,000 units including heavy and light commercial vehicles as well as passenger cars, according to Georgias police department.

LLK found that industrial lubricant demand in Georgia is growing very slow and amounts to 2,500 t/y. Georgia has literally one or two large enterprises, LLK said. Mainstream companies in Georgia are medium-sized or small enterprises.

In Armenia, Lukoil lubricants can be found in stores across the country. In the countrys business-to-business segment we supply over 90 percent of all lubricant consumers. In the business-to-consumer segment we supply around 80 percent of all end users, LLK said. The company also supplies lubes to the Armenias state power distribution company.

In Azerbaijan, the company is principal lube supplier to SOCAR, the national oil major. It also supplies factory fill oils for Belarus-branded tractors and other type of machinery and cars assembled at Ganja Auto Plant, located in the city of the same name. LLK is a factory fill supplier for a Lifan automobile plant in Nakhchivan.

Lukoil is the leading Russian lubricant maker and last year it held 48 percent of the countrys lubricants market.

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