In general, the global trend is a slow-down in lubricant production. Falling far behind the leading industrial countries, Russian oil production and overall oil refining are not immune from this trend. Tsvetkov said that while the pace of production diminishes, the market share of high quality lubricants is rising, followed by stricter government regulation of chemical components used in lubricants.

The research institute said that in 2005, base oils exported from Russia totaled 1.8 million metric tons, while exports in 2008 reached only 1.6 million tons. By comparison, the amount of high quality lubricants imported into Russia has grown from 200,000 tons in 2005 to about 400,000 tons in 2008. Lubricant production in Russia fell from 2.6 million tons in 2005 to 2.4 million tons in 2008. Lubricant consumption also declined, the research institute stated, from 1.8 million tons in 2005 to 1.6 million tons in 2008.

Tsvetkov said the main reasons for this slump include the low level of usage of modern catalyst processes in base oil production, reduction in domestic additives manufacturing and lack of government intervention to solve lubricant industry problems.

Over the last two decades, there was no significant investment in reconstruction and modernization of the Russian oil refineries built with installations based on the industries of the 1950s, 70s and early 80s. Therefore, 99 percent of these capacities are used for production of [API] Group I base oil, Tsvetkov stated. He noted that over the last two decades, the corresponding branch of science has also lacked budget financing.

Nevertheless, some vertically integrated oil companies are developing plans to establish hydrocatalytic processes at their plants to upgrade current base oils to API Group II and III quality.

The estimated Group II to Group IV base oils production for the 2012-2015 period will include 190,000 tons per year at Tanekos Nizhnekamsk refinery, 150,000 tons per year at Rosnefts Angarsk plant, 100,000 tons per year at TNK-BPs Yaroslavl plant, and 10,000 tons per year at Tatnefts Nizhnekamsk location. LukOils plants are set to produce 250,000 tons per year total by 2015, as a result of the companys $400 million major investment plan over the next decade, said Maxim Donde, general director of LukOils LLK International lubricants arm.

The most serious changes to commercial oil standards involve requirements for mobile equipment, especially for motor and transmission oils. Tsvetkov said that the technical values of these oils have reached the critical level where they can combine high performance properties and modern ecological requirements.

It is impossible to produce motor oils for modern engines with Group I base oil. There is a similar situation in the field of transmission and hydraulic oils production, he noted. Although certain companies are working on producing additives that are up to modern quality standards, there is no major progress in reducing the shortage of highly efficient domestic additives, Tsvetkov added.

The majority of motor and transmission oils are produced with foreign additive packages, he said, and the same trend occurs in the field of mobile equipment transmission and hydraulic oils production.

One of the most serious issues for high-grade development of commercial oils is the weakness that the Russian industry faces in oil testing. Valuing performance properties of lube oils with standards equal to those of foreign ones still raises discussions between Russian industry experts, as well as lube manufacturers and consumers.

Our strategic direction has to introduce a contemporary testing system for transportation lubes. It is time for us to leave this issue behind, Tsvetkov concluded.