It has been rare to see that type of transaction in Russia, but it happened in September when energy giant Gazprom decided to buy Select Oil, an independent blender located outside of Moscow.

An industry analyst said the deal goes against the grain of the Russian industry, but that it probably makes sense in this case.

Russian oil companies as a rule are not very concerned about their blending plants because they are focusing in other areas, said Tamara Kandelaki, general director of InfoTek-Consult, a Moscow firm.

Located in Fryazino, 25 kilometers northeast of Moscow, Select Oil operates a blending plant with capacity of 30,000 metric tons per year. Founded in 1992, it has been a relative rarity in the Russian market, as an independent domestic blender attempting to compete in the automotive lubricant market with its own brand, Consol.

Terms of the deal were not disclosed, but Gazprom said it wanted Select Oils blending capacity.

Part of the companys development strategy is the acquisition of low-tonnage blending and filling capacity assets, Gazprom spokesman Ivan Yakovlev told Lube Report.

Kandelaki said she is not aware of another case of a Russian oil company acquiring a lubricant blender.

All of Russias oil companies are more concerned with their base oil facilities, she said. They have plans to rebuild their plants, and they are thinking about upgrading to produce higher grades of base oils. Only a small portion of base oil capacity in Russia is API Group III, with all of the rest being Group I.

Blending plants are not very interesting to these companies, Kandelaki said. She asserted that Fryazino, a science town with numerous research and development facilities, should be an attractive location for Gazprom. Select Oil has a good facility just outside Moscow, Kandelaki said. It is important to have a good facility near Moscow, and Gazproms existing plant is far away, in Omsk.

The size of Select Oils plant might raise some eyebrows. International oil majors typically try to gain economies of scale by consolidating blending operations into large plants. For example, Shell is currently constructing Russias first foreign-owned blending plant – a Torzhok facility with capacity of 180,000 t/y. But Kandelaki said the Fryazino plant still may have been a good deal, depending on how much it cost.

They havent told us the price, she said.

In any case, statements from Gazprom suggest that it may want to purchase more facilities like Select Oils. Perhaps the industry will see more blenders being acquired by big oil companies in Russia.