Gazprom to Blend in China, Seek Deal in Libya


Gazpromneft-Lubricants is pushing to enter the markets of China and Libya; for the former it plans to open local production by 2019, in the latter it is trying to land a large supply deal.

Until now in China we supplied base oils only, but not anymore, Alexander Trukhan, Gazpromneft-Lubricants general director, told Lube Report. We already signed deals with two local distributors from Hong Kong and Shanghai, and in the coming months we plan to ship finished products there. Both companies pledge to buy around 5,000 tons annually.

Gazprom expects its sales in China to increase significantly in the next few years. As the countrys [automotive sector and industry] rapidly transition to more complex cars and equipment, consumption of oils with high operating properties increases, and our products are in demand there.

Trukhan said China imports huge volumes of base oils and finished lubricants. Our sight is on a few important regions. Very soon we will open our representative office in China to manage our plans for establishing local blending of our products at the latest by 2019, he said, adding that it will most likely be in the form of an acquisition of a local production facility that produces prominent Chinese brands.

Its the experience of the global lubricants players. At the moment we cooperate with Cherry and Lifan, Chinese car manufacturers [assembled in Russia]. But some automakers have invited us to start providing factory fill for their assembly lines in China.

At the moment the company is attempting to win a 21,000 tons annual lubricants supply deal in Libya, saying that the risks for such a deal are minimal, because the contract will be possible only with a 100 percent prepayment option.

In other company news, Trukhan confirmed that work on modernization of base oil production in Gazprom Nefts refineries in Yaroslavl and Omsk is underway. The 100,000 tons per year API Group III base oil plant in Yaroslavl (a 50-50 joint venture with the state oil giant Rosneft) is scheduled to stream in 2016. The 230,000 t/y Group II and Group III base oil plant in Omsk will be ready to stream a few years later. Half of the production in Omsk is meant for the domestic market as Russia imports around 100,000 t/y of Group III base oils, and we want to substitute these volumes. The other half is meant for export to Central Asia and East Europe where such production is almost nonexistent, Trukhan said.

The company is Russian oil major Gazpromnefts lube arm. In 2014 the company said it produced 485,000 tons of base oils and lubricants, approximately the same volume as in 2013, and held a 14 percent share of the countrys 1.7 million t/y market.

Over 50 percent of its production is exported to the foreign markets. Last year we entered 10 additional markets, including Israel, Iraq and Indonesia, as well as Costa-Rica, Congo and China. Also, we increased our supplies to Egypt, Trukhan said.

Through its lubricants production facilities in Russia, Italy and Serbia, the company also supplies the markets of Central Asia, Belarus and Ukraine, the Baltic states and other European countries.

The 24,000 t/y blending plan in Bari, Italy, covers 4 percent of the Italian finished lubricant market, and last year Gazprom started sales in Spain as well.

The company now ships its products to 51 countries.

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