Lukoils 2014: More Lubes, Less Base Oil


Lukoil produced 973,000 metric tons of base oils last year, down about 7 percent from 1.05 million tons in 2013, while its finished lubricant production increased 20 percent to 121,000 tons.

The Russian oil major accounted for 45 percent of the countrys combined production of base oils and lubricants, according to the companys annual report.

Last year, Lukoil produced 121,000 tons of finished lubricants at its blending plants in Russias Tyumen Oblast, as well as its locations in Finland, Romania, Turkey and Austria. In 2013, it produced 101,000 tons from those plants, with the exception of the 80,000 t/y plant in Austria, which it purchased in July 2013.

Lukoils strategy in 2014 was to scale down production and marketing of oils in its low-priced segment, and to instead focus on domestic production of high-tech oils, according to its report. The company sold lubricants in 103 countries.

Lukoil said it continued trying to develop its premium business segment, which includes high-performance lubricants and marine lubricants. Lukoil produced 29,400 tons of high-performance oils in 2013, up 24 percent from 23,700 tons. The category includes private label industrial lubricants, which Lukoil sold 68 percent more of in 2014. Production of all private label lubes jumped 10 percent year-over-year.

Lukoil operated three base oil plants in 2014. Exactly half of the companys 973,000 tons of base oil output was from its Volgograd refinery, while its Perm location accounted for 33 percent and its refinery in Nizhny Novgorod – which closed in April of this year – made up 17 percent. Base oils accounted for 1.8 percent of the total petroleum product throughput from Lukoils refineries, the company noted.

The company said it is developing methods of treating hydrocracked residues to produce API Group II base oils at its Volgograd refinery.

In September, Lukoil opened a 30,000 t/y grease plant located at its Volgograd refinery. The plant operates as Intesmo, a joint venture between Lukoil and the state-owned Russian Railways (RZD), and Lukoil called the project one of its greatest accomplishments of 2014. The plant is set to supply around one-third of its output to RZD, which is about 80 percent of the carriers total grease consumption, the company noted. The product mix includes greases intended for major industries and transportation, as well as for general use.

Lukoil said its top priority in 2015 is to increase its production in Russia by taking advantage of the state-sponsored import substitution policy. Its priorities include the expansion of its lubricant and grease portfolio from 336 products to 370 products, expansion of its distribution range and strengthening cooperation with its major customers.

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