Between 2000 and 2014, Russia imported an average of 40 percent of its grease. In 2016, it brought in around 25 percent – some 14,000 metric tons – of its 56,000 metric ton yearly consumption, but this should fall further as new plants come on stream and large marketers ramp up production in response to the Kremlins protectionist economic agenda. Of that import total, 11,000 metric tons were high-quality greases made by leading international oil companies.

One In, One Out

The substitution policy was implemented in March 2015 to reduce dependence on imported products and technologies and to foster development of the Russian industrial sector. This has driven expectations that domestic grease production will meet 95 percent of national demand by 2025, up from 75 percent last year, according to Moscow-based extractive industries consultancy InfoMine. Domestic production is expected to increase from 45,300 metric tons in 2016 to 65,000 metric tons in 2025.

In 2010-13, national grease production was hovering [around] 30,000 metric tons per year but steadily increased to 40,000 metric tons in 2015, peaking [just below] the 46,000 metric ton mark in 2016, InfoMines Olga Voloshina told GBCs Base Oils and Lubricants conference in Moscow in May.

Before the import substitution policy was implemented, imports dominated over domestically produced grease. In 2010, 20,000 metric tons of the 42,000 metric tons consumed was imported, representing almost 48 percent. The economic crash caused by tumbling oil prices and compounded by international sanctions after the invasion of Ukraine in 2014 meant that domestically produced grease could compete with price with the imports. The devaluation of the ruble has contributed to a steep drop of grease prices and deemed [the market] unfavorable for large importers, Voloshina said. Locally produced grease was U.S. $1,600 per metric ton in 2011, falling by 50 percent to around $800 by 2016.

In the past two years, the majority of imported greases came from Ukraine at 3,000 metric tons, Germany and Belgium at 2,000 metric tons each, and the United States and Finland around 1,000 metric tons each. The rest of the imports, or around 5,000 metric tons, came from other destinations.

Cast of Players

More than half of domestic production is shared between three main players: Moscow-based Gazpromneft Lubricants with 22 percent, Intesmo from Volgograd with 18 percent and Kazan-based Rikos with 16 percent. Other, smaller grease
marketers in Russia include Fosfokhim (11
percent), Rusma (6 percent), Inkormet (5 percent), Misma-Ros (4 percent), Neftemaslozavod (3 percent) and Nefteproduct (2 percent). Gazpromneft Lubricants is Gazprom Neft oil majors lube arm. Intesmo is a 75-25 joint venture between the state owned Russian Railways and Lukoil Lubricants. State-controlled Rosneft owns Nefteproducts specialty producer in Moscow.

Of the high-quality grease importers, Shell held 23 percent market share in 2016, followed by ExxonMobil with 10 percent and Total with 9 percent, according to InfoMine. These marketers were followed by Fuchs and Chevron with 5 percent each. Other marketers supplied the remaining 49 percent.

By type of product, around 80 percent of the imported greases were multipurpose last year and were mainly used in the automotive sector, while 11 percent were used in metallurgy and 4 percent for drilling operations. The rest, or 4 percent, were used in other sectors.

Export Destinations

Russia is not a significant grease exporter, since home demand still outstrips domestic production. Combined, it sends abroad around 5,000 metric tons of greases annually, of which more than 2,750 metric tons went to Vietnam, Mongolia, Azerbaijan, Ukraine, Kazakhstan and Tajikistan. Volumes have not changed since 2016, InfoMine reported.

The largest Russian grease exporter is Gazpromneft Lubricants, at 30.8 percent, followed by Delfin Distributions, Intesmo and Neftemaslozavod, which handled 15.2 percent, 12.4 percent and 9 percent, respectively. Novocherkassk-based Neftemaslozavod sent 9 percent and Rikos 8.3 percent, with the remaining 21.4 percent exported by smaller producers.

Domestic Production Components

Russian manufacturers primarily used lithium and lithium-based thickener complexes for the production of greases. We have seen a significant change since 2010, when calcium hydrate and sodium and sodium-calcium thickeners were prevalent on the market. With the modernization of grease production, the use of lithium-based thickeners became prevalent in the country, Voloshina said.

In 2016, lithium and lithium-based complexes were used in around 40 percent of Russias total grease production, calcium-hydrate soap thickeners were used in around 20 percent and calcium complexes in 20 percent. The use of sodium and sodium-calcium based thickeners shrank from more than 40 percent in 2010 to just 10 percent currently.

Russias oil and gas production industry and its extensive railway network are the two largest consumers in the country, demanding 22 percent of the greases marketed in 2016, according to InfoMine. Other large consumers are metallurgy, automotive and mechanical engineering, each accounting for some 9 percent. The construction and mining sectors consumed 6 percent and 5 percent, respectively, with the remaining 18 percent consumed by other industrial sectors.

Capacity Projects

Two announced grease production projects are expected to be completed in Russia in 2018. Titan, a petrochemicals manufacturer based in Omsk in Western Siberia, is preparing to start its 12,000 metric tons per year plant in Novocherkassk. The company said it would be ready for production by the summer of 2018.

Earlier this year, Rosneft confirmed plans to expand the Nefteproduct plant in Moscow to meet the growing needs of the Russian defense sector. The Russian military, the third-largest defense spender in the world, has huge numbers of weapons systems, vehicles and other assets that need a wide range of greases. Meanwhile, a representative of Intesmo said the company intends to expand its product portfolio.

The Kremlins protectionist economic policy, which by some accounts had little effect beyond the agricultural industry, and tense relations with the West have provided favorable market conditions for the nations lubricant companies and a more secure future for domestic grease production projects.