Russias Additives Industry Withers


MOSCOW – Russias lubricant additive industry has taken a pummeling from foreign competition the past several years, an industry insider said at a conference here last month. Domestic production has fallen in half since 2001 and in general is poorly suited to compete against western technology.

The countrys independent additive suppliers are showing some signs of life, according to Boris Sobolev, chief specialist with Moscow-based additive distributor Transpromservis. But he suggested that alliances with foreign companies may be the only way for the domestic industry to survive.

In additives, we are moving backwards, Sobolev told the Base Oils and Lubricants in Russia and the CIS conference, hosted by the World Refining Association, on April 16. And we are moving at a fast rate.

Total production of lubricant additives by Russian companies reached approximately 105,000 metric tons in 2001 but has fallen every year since then, Sobolev said. Last year it slid to approximately 50,000 tons, less than half the level just six years earlier.

Domestic production has shifted drastically in recent years, said Sobolev, who assembled his paper with assistance from Moscows InfoTek-Consult. Integrated oil companies produced approximately 85,000 tons of lube additives in 2001, accounting for more than 80 percent of output from Russian companies. Their production dropped steadily since then, sliding to approximately 20,000 tons last year. Yukos, Lukoil, Slavneft, Sibneft, TNK and a group of refiners in and around the city of Ufa were among the oil companies with additive businesses that declined or disappeared.

Output by independent additive companies climbed slowly but steadily over that period, reaching approximately 30,000 tons in 2007, up from just over 20,000 tons in 2001.

Antioxidants are by far the biggest category of lube additives produced in Russia. The nations total jumped from approximately 18,000 tons to 22,000 tons last year, though that number remained approximately 33 percent lower than the 2001 level of 32,500 tons.

Antioxidant production by oil companies is still headed downward, having dropped from 18,000 tons in 2001 to 6,000 tons last year. Sales by independents rose a bit – from 14,000 tons to 16,000 tons during that period.

Domestic output of pour-point depressants has followed similar trends. Production by oil companies slid from approximately 2,300 tons to 800 tons, while product from independents rose from approximately 3,300 tons to 3,900 tons.

Meanwhile, production of sulfonates and phenols has nearly disappeared. Russian companies made approximately 34,000 tons of the former in 2001 but less than 8,000 tons last year. Sobolev said phenol output did indeed cease last year, having fallen from 20,000 tons six years earlier.

While a few independents are demonstrating an ability to compete, Sobolev said Russias additive industry in general is hopelessly behind western companies, making products that are comparably priced yet technologically inferior. Moreover, oil companies – traditionally big additive producers – have little incentive to reverse the trend.

The sales value of additives is peanuts for oil companies, he said. They are sharply reducing the [production] of additives.

He noted, however, that Lukoil entered a joint venture with Belarussian additive producer Naftan and that production from Naftans plant is growing rapidly. Sobolev contended that Russias additive industry is worth saving and suggested that Russian companies should seek similar alliances with western additive producers.

This is the only way out for us, he said. In this way, we could overcome the time lag.

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