LukOil announced last week that it has upgraded the quality of API Group I base oils produced at its plant in Nizhni Novgorod and that it plans to do the same at facilities in Volgograd and Perm. Part of efforts to increase the appeal of their stocks in Western Europe, officials said the initiative has raised the viscosity index of oils produced at Nizhni Novgorod by approximately 8 points.
This is a considerable improvement, and puts our products in line with Western European standards, said Vladimir Dubotolkov, head of base oil sales for LukOils lubricant subsidiary, LLK-International. We are pleased with the results, so we plan to duplicate them at our other plants.
Dubotolkov said the company has already upped prices on the improved oils by $15 to $50 per ton.
An industry observer said LukOil is not the only producer upgrading the quality of its base oils.
Improvements in base oil quality from Russian and other Central European refiners is being driven by a recognition of the need for higher-performance automotive and industrial lubricants in their local markets and the potential opportunities of exporting to Western Europe and other destinations, said R. David Whitby, chief executive of Woking, U.K., consultancy Pathmaster Marketing Ltd. The value of export opportunities from Russia is higher if the base oil qualities are equivalent to those that Western European lubricant blenders have been used to for many years.
Dubotolkov said the improvements at Nizhni Novgorod were achieved through process changes and without installation of new equipment. The viscosity index of oils produced there rose from approximately 94 or 95 to a maximum of 104, though the average over the long term may be a point or two lower. Color and volatility also improved.
The company plans to incorporate the same process improvements at Volgograd and Perm by the end of next year. Dubotolkov said quality levels at those two plants should reach the same levels as Nizhni Novgorod. This would represent a smaller improvement at Perm since oils produced there were of slightly higher quality to begin with.
Management said the process improvements also increased capacity by 4 percent. Nizhni Novgorod had capacity to make 5,500 barrels per day.
LLK also switched the classification used for its exported base oils from the SAE system traditionally used in Russia to the solvent neutral system employed throughout most of the rest of the world.