Russian Owners Balk at Balkan Base Oil Upgrades


Russian owners of the two key Balkan lube makers, Rafinerija ulja Modrica and Naftna Industrija Srbije, are slashing their base oil development programs due to low sales and Western sanctions, according to industry insiders.

The lack of funding and access to new technologies is the reason why Modrica already reduced its research and development activities, Zorica Davidovic, general manager of Bargos Loa, a Belgrad-based consultant and management firm, told Lube Report at the Croatian Society for Fuels and Lubricants European Lubricants and Base Oils Symposium held in Rovinj last month. A number of employees have already been laid off or transferred to other departments, she said.

Rafinerija ulja Modricas 65,000 tons per year API Group II and Group III refinery is the only one of its kind in the Balkans.

A number of speakers had told recent industry conferences that Modrica was set to increase its capacity to around 200,000 t/y by the end of the decade.

I’m pessimistic that it will happen by 2020, Nenad Damjanovic, commercial director at Optima Grupa, told Lube Report at ACIs European Base Oils and Lubricants conference in Vienna, Austria, in September. What we see in the current circumstance is that Modricas base oil refining development is postponed for beyond 2020.

Optima Grupa is a group of companies from Bosnia that includes Modricas refinery. It is run by Neftegazinkor, a subsidiary of Russian state-owned Zarubezhneft.

Another Russian-owned player in the region, Serbian firm Naftna Industrija Srbije, has also postponed its previously announced base oil modernization. Two years ago, a company official presented a plan to construct an 180,000 t/y paraffinic and naphthenic base oil plant at NIS refinery in Novi Sad.

Russian oil major Gazprom Neft is the majority owner of NIS.

There is a feeling that inactivity regarding the promised base oil modernization [programs] have something to do with the bad economic situation in Russia and weak financial results of [parent company] Gazprom, said Davidovic. Effectively, the Russian vertically integrated oil companies are so intertwined with Moscow and its policy of confrontation with the West that it could ruin the Bosnian and Serbian lubricants manufacturing industry.

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