LukOil Targets Gaz Group


OAO LukOil last week entered a supply and technology agreement with Russian automaker OOO Gaz Group. The deal calls for LukOil subsidiary OOO LLK-International to supply automotive lubes for factory fill and industrial lubes Gazs production plants.

The arrangement marks the energy giants latest step in a strategy to tie up with original equipment manufacturers.

The agreement with Gaz Group is an important step in development of LukOils lubricant business, as it will help expand our product sales market, and give a boost to our programs on developing new types of high quality lubricants, said Vladimir Nekrasov, first vice president at LukOil.

Gaz has at least 15 plants making everything from sedans and trucks to buses and excavation equipment. According to LukOil, it is Russias second-largest automaker, ranking behind OAO Avtovaz. Gaz reports annual revenue of approximately 100 billion roubles (U.S. $4 billion).

An LLK spokesman said industrial lubricants will account for approximately 70 percent of the sales volume generated by the agreement. In addition to buying motor oils, transmission fluids and other products for factory fill, Gaz will advise customers to use LLK products for replacement fill. LLK will blend lubricants that Gaz will market under its own brand – a new foray for the automaker.

The agreement, which lasts through 2010, also calls for the companies to cooperate in the development of lubricants and states that Gaz will consider those lubes part of its engineering process.

LukOil, Russias largest lubricant marketer, entered a similar if less broad agreement with Avtovaz in mid-2006. Officials said they are seeking tie-ups with other OEMs. For example, the company is negotiating a deal to supply specialty lubricants for diesel locomotives to General Electric.

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