The Russian lubricant industry faces numerous challenges, such as increasing imports of finished products, developing high quality base oil production and establishing a modern nationally recognized lubes testing facility, according to an industry pundit. The worlds biggest crude oil producer, Russia has nine base oil plants and produced 2.4 million tons of base oils and lubricants in 2011, placing it among the top five global lubricants producers, according to Oleg Tsvetkov of the Moscow-based All Russia Research Institute of Oil Refining (VNII NP).

In 2011, Russia consumed 1.6 million tons of base oils and exported the remaining 800,000 tons. However, in 2011 the country imported around 400,000 tons of base oil, or one-quarter of the total consumed base oil, Tsvetkov told RPIs Lubricants Russia conference in November. Around 98 percent of the countrys output is [API] Group I base oil. Unfortunately [TNK-BPs] Ryazan base oil plant was shut down a couple of years ago, while [Tatnefts] Group IV base oil plant in Nizhnekamsk is expecting to resume in 2015, Tsvetkov said. The Russo-British joint venture, TNK-BP, was recently acquired by Rosneft, the countrys biggest crude oil producer. Tatnefts Nizhnekamskneftekhim plant in Nizhnekamsk stopped its polyalphaolefins production in 2010 due to the feed-stock supply issues.

The institute expects the countrys Group I base oil demand to remain high, and by 2020 to constitute 60 percent of the total base oil demand. By 2020, Group II and III base oils will comprise 25 percent and 12 percent of the total demand, respectively, and Group IV and V base oils (PAOs and types not included in Groups I through IV) will comprise 1 and 2 percent, respectively. The country is also expecting quite a few capacity upgrades and new plants that will create Group II and III base oil plants.

Last year the country produced 660,000 tons of motor oil, one-half of its 2001 output of 1.3 million tons, according to Tsvetkov, who cited a gradual fall in productivity coupled with the increasing role of imported lubricants. On- and off-road vehicle engine oils held the biggest share (58 percent) of the countrys production in 2011, followed by industrial oils (33 percent), power generation oils (7 percent) and other products (2 percent).

The biggest problem the Russian lu-bricants industry faces is the establishment of a modern national center for lubricant testing, according to VNII NP. Tests under API and ACEA specifications are missing in Russia today…and it is a very big minus for the industry, Tsvetkov concluded.

Total, OiLibya Build Blending Plant

Total and OiLibya opened a joint venture lubricant blending and storage facility in Egypt in December. Both companies said they expect the project to help expand their sales in the North African country.

The project is located on a 34,000-square-meter site in Borg El Arab, Egypt, near Alexandria, and operates under the name Oil Products Storage and Blending Alexandria. Total and OiLibya own 65 percent and 35 percent stakes, respectively.

The blending plant has capacity to produce 40,000 metric tons per year of finished lubes. The site has 23 storage tanks with combined capacity of 8,000 cubic meters and a laboratory for quality control and oil analysis. It employs 50 people and cost approximately U.S. $20 million.

Naftan Makes Group III

State-owned Belarus oil company Naftan has inaugurated a low-tonnage Group III base oil unit at its Novoplotsk refinery. The base oil is a byproduct at the refinerys fuel hydrocracking unit. At present, the units total output is 6,000 tons annually, with the possibility for further expansion in the future.

The products general technical characteristics show that it has Group III base oil quality, a Naftan official, who spoke on condition of anonymity, told Lube Report. But further testing is needed to confirm that it can match the same products offered on the market. The Novoplotsk refinery already included a 195,000 t/y Group I base oil plant.

Former Delfin Official Pleads Guilty

The former president of lubricants blender Delfin Group USA pleaded guilty to exporting aviation oil and polymer oil additives to Iran in violation of a U.S. economic embargo. Markos Baghdasarian was formerly president of lubricant blender Delfin Group USA, of North Charleston, S.C. The blender is the U.S. subsidiary of Russia-based Delfin Group.

Baghdasarian faces a potential sentence of five years in prison for conspiring to violate the International Emergency Economic Powers Act, 20 years for violating the same Act, and five years for false statements, according to a U.S. Department of Justice statement. The government alleged that Baghdasarian engaged in the sale and export of $850,000 in aviation oils and polymer with customers in Iran from June 2010 through 2011, in violation of U.S. imposed sanctions over Irans nuclear program.

Baghdasarian was terminated from Delfin in early September 2012, and the U.S. Commerce Department permitted Delfin USA to resume normal domestic and international trade compliant with Export Administration regulations and other applicable U.S. law.

Lotos Oil Expands to Caucasus

Polish lubes marketer Lotos Oil has expanded its supply to Azerbaijan, its second-largest Caucasus export market after Georgia. The company signed an agreement with its partners to supply motor oils to KIA Motors official dealer service stations in Azerbaijan. Through its partners in the country, Lotos already sells lubricants to the State Oil Company of Azerbaijan, land developer and contractor Akkord, and energy construction company Azenco.

Lotos Oil produces automobile, industrial and agricultural lubricants, as well as marine and railway oils, gas and other engine oils, greases and car care products. It operates a 245,000 t/y Group I base oil plant in Gdansk. In Poland, it also operates three lubricant production facilities located in Gdansk, Czechowice and Jaslo.

IVS Building Tanks in South Africa

Island View Storage, South Africas largest independent operator of bulk liquid storage, is developing plans to install new tanks, tantalizing news for a base oil market short on storage space. However, an IVS official cautioned that the project would fall short of alleviating a bottleneck on base oil imports and that the additional capacity will satisfy only a few customers.

IVS, part of South Africa-based Bidvest Group Ltd., currently owns and manages 725,000 cubic meters of liquid storage space, accounting for 77 percent of the independently controlled bulk tankage in the country. IVS has 430,000 m3 at Durban, 260,000 m3 at the port of Richards Bay and 35,000 m3 at the inland port of Isando at Johannesburg.

The company plans to install tanks that can accommodate liquids with flash points of 92 degrees C and above, meaning that they could accommodate base oils and vegetable oils. Petroleum products, including base oils, finished lubricants, lube additives and diesel, account for approximately 20 percent of the liquids handled annually by IVS at Durban. Vegetable oils account for 44 percent and chemicals the remaining 36 percent.

Oxea Continues Acids Investments

Oxea has expanded the nameplate capacity of its carboxylic acid units in Oberhausen, Germany, by 10 percent. The company also announced it is building another carboxylic acid plant in Oberhausen, which is expected to be completed in the first quarter of 2013. By then Oxea will operate five such production plants globally. The company does not disclose total capacity.

Carboxylic acids are used to manufacture energy-efficient lubricant esters for refrigeration units such as air conditioners and refrigerators, or specialty plasticizers, among other uses. In August 2012, the company increased production at its carboxylic acid plant in Marl, Germany, by 20 percent. In late 2010, the company completed the first phase of the three-stage capacity increase at its carboxylic acid production units in Oberhausen, adding five percent to its global capacity.

Gazprom Widens Lube Sales Reach

Russian lubricants marketer Gazprom Neft-SM expanded its sales network to Germany, Ukraine, Turkey and Iran. The company began selling its G-Energy motor oils in Germany early in December through its distributor DW Oil.

The companys agenda is an aggressive expansion of its product sales. At the moment lubes and technical fluids under the G-Energy brand are sold in 38 countries. We are trying to penetrate the market with high quality products, a flexible sales network and thorough technical support, said Alexandr Truhan, the companys general director.

Gazprom Neft-SM also sealed distribution deals for its passenger car and commercial vehicle oils, as well as its industrial oils in Turkey and Iraq. The Turkish company Saskim Petrol Kimya is Gazproms distributor in the country.

The companys premium motor oils for gasoline and diesel automobile engines are also offered in official Toyota service centers in Istanbul and Gebze. Its commercial vehicle engine oil is sold at wholesale points in Istanbul, Ankara, and Izmir. The companys industrial oils are supplied to Hekim Yapi, one of Turkeys biggest construction companies.

G-Energy premium motor oils are extensively sold in Ukraine as well, according to the company. Gazprom Neft-SMs distributor there is ATL, which operates 52 auto part stores and 21 service centers in Kamenets-Podolsk, Korosten, Myrhorod, Pryluky and Ternopil.

Gazprom Neft-SMs combined lubricants and base oils production in 2011 amounted to 409,000 tons. It held 11 percent of Russias lubricants and base oils market, according to VNII NP, a Moscow-based All Russia /Research Institute of Oil Refining.

Shell to Build Lube Plant in Indonesia

Shell announced plans to build a new lubricants blending plant in Indonesia, with construction starting after completion of a tender process over the coming months. The plant will be located at the Marunda Center, just north of Jakarta, and will produce a range of consumer, transport, industrial and marine lubricants. It is expected to have a capacity of 120,000 t/y.

The company said it expects strong growth in lubricants demand from Indonesia, driven by new vehicle ownership and production, construction and industrial activity – especially in the power generation and oil and gas production sectors. Shell is the largest international supplier of lubricants in the country, currently importing finished products from its blending plants in Singapore and Malaysia.

Shell will own 100 percent of the plant, which will incorporate lubricant blending, filling and packaging. Processes will be automated, and the plant will be equipped with a quality control system that will text at all stages of production to ensure products meet quality specifications.