Addressing a recent industry meeting, Boris Sobolev of Moscow-based consultancy InfoTek, said, [T]here is a growing demand for high-quality hydraulic oils that have not been produced in [Russia] before and that is now satisfied by imports. This situation caused domestic production of hydraulic oils to fall slightly from 132,000 tons in 2011 to 125,000 tons in 2012.

This trend is not likely to continue, however, because Russian lube marketers are expanding their partnerships with foreign original equipment manufacturers to supply hydraulic oils that meet their requirements. The heavy machinery fleet – which currently numbers about 250,000 units – and the amount of industrial equipment in the country is expected to grow significantly in coming years. And these partnerships are critical for the growth of the Russian lube industry.

In the developed economies, hydraulic oils hold around 15 percent of the total lubricants market, while in Russia this number is around 11 percent, said Sobolev, who is head of InfoTeks oil refining and petrochemical research department. Addressing the Global Business Clubs CIS Fuels and Lubes conference in Moscow last May, he indicated that large volumes of hydraulic oils were imported into Russia. According to InfoTek research, in 2011, Russia consumed 161,000 tons of hydraulic oils, of which 41,000 tons were imported.

This is a remarkable volume, considering the fact that total production of hydraulic oils in Russia in the last few years averaged between 120,000 and 130,000 tons per year, Sobolev said. The imports are premium-quality antiwear hydraulic fluids with good thermal and oxidation stability for use in mobile and stationary high-pressure hydraulic systems. They carry the designations HLP and HVLP, where H represents straight mineral oil, L represents rust and oxidation inhibitor, P represents antiwear agents and V represents improved viscosity-temperature characteristics. Sobolev added, This trend mirrors that of the increased importation of premium-quality motor oils, which are also high in volume compared to the motor oils produced in the country.

Standards & Partnerships

Hydraulic oils are formulated to ensure reliable operation of the hydraulic system over a specific temperature range. They also should protect the materials and resist corrosion, Sobolev said. Furthermore, hydraulic oils should guarantee minimum wear of the system components, [resist] foaming during operation and [resist] emulsification when [exposed to] water. And they have to protect the seal materials and other parts of the system made of natural and synthetic rubber. The composition and quality of the base oils and additive packages are critical to meet these requirements, he continued.

InfoTek found that in industrial applications, Russian original equipment manufacturers often use Bosch Rexroth pumps in their hydraulic systems, and they set compliance to the DIN 51524 standard as the principal requirement for hydraulic oils. Generally, equipment [that is] five years or older uses the Russian-made IGP series of oils [formulated to meet the GOST standard], Sobolev said.

Mobile applications usually meet the requirements of the DIN 51524 and ISO 11158 standards. InfoTek found that over 90 percent of road building machines in the country are equipped with hydraulic systems made by the Russian OEM PSM-Hydraulics. Foreign equipment manufacturers such as Komatsu, Hitachi, Caterpillar or JCB and other Russian OEMs (Rost-selmash, Krasnoyarsky Harvester Plant, Klintsy Tractor Plant, UralVagon-Zavod or GAZ Group), all specify the same requirements for hydraulic oils as in DIN 51524 Part 2 and 3.

According to Sobolev, a lot of Russian machinery made in the 1970s and 1980s is still operating, and it uses oils that conform to the countrys obsolete TS and GOST oil specifications. Of these, there are [so-called] low-cold and high-viscosity oils, as well as fluids for hydromechanical transmissions. Even though they conform to obsolete specifications, low-cold oils used in the severe conditions of the Russian North often are produced from hydro-cracked API Group III base oils. The rest of the products are formulated from Group I base oils.

Sobolev pointed out an interesting fact about how machinery owners in Russias vast northern territories cut the costs of the oil they use. During the short summer when the machinery is used most often, many owners use general-purpose industrial oils as a replacement for hydraulic oils. These are cheap, low-quality oils without additives. They are [used for only one] season, and owners dispose of them after the equipment is [stored for] the harsh and long winter months, Sobolev said.

InfoTek found that Russian lubricant producers such as TNK-BP, Lukoil and Gazprom Neft are establishing partnerships with many European Union and other foreign OEMs to design and supply high-grade premium oils for high-performance equipment. These oils meet the foreign OEM standards, and are approved for use. Russian premium oils [have] good quality and are produced from Group I to IV base oils and foreign-made additive packages, Sobolev noted.

Domestic & International Markets

Of the 132,000 tons of hydraulic oils produced in Russia in 2011, premium-quality oils accounted for 14,000 tons or almost 11 percent of the total, while 118,000 tons were conventional low-quality oils. Lukoil is the largest hydraulic oil marketer in the country. In 2011 it sold 50,380 tons of hydraulic oil to both domestic and international customers for a 38 percent share of the market. It was followed by Gazprom Neft, which produced almost 30,000 tons and held 20 percent of the market.

The other three major hydraulic oil suppliers in Russia are Rosneft, TNK-BP (acquired by Rosneft earlier this year) and Bashneft. In 2011, they produced 20,000 tons (15 percent share), 12,600 tons (10 percent share) and 11,400 tons (9 percent share), respectively. About 11,000 tons, or 8 percent of the total, were produced by other lubricant companies.

Sobolev said that the leader in producing premium hydraulic oils in 2011 was TNK, which produced 7,000 tons of premium-quality hydraulic oil, or 55 percent of its total hydraulic oil volume. The same year, Lukoil produced only 3,000 tons of premium hydraulic oils or 6 percent of its total, Sobolev said. In 2011, Gazprom Neft produced almost 4,000 tons of premium hydraulic oils or 14 percent of its total hydraulic oil output.

In 2012, the share of premium hydraulic oils in Russia increased to 20 percent of the total volume, or almost two times higher than the previous year, according to InfoTek. We are observing an ongoing trend of increased quality in the hydraulic oils produced in the country, Sobolev said.

As noted above, imported hydraulic oils in Russia amounted to 41,000 tons in 2011. Major import-ers were Shell and ExxonMobil, which accounted for 28 percent and 26 percent share of imports, respectively. Other large importers include Finlands Teboil (6 percent share), Japans Hitachi (4 percent share) and Frances Total (4 percent).

The biggest supplier of hydraulic oils for the domestic Russian market is Lukoil. In 2011, it held almost 30 percent share of the total volume of hydraulic oil consumed in the country. It was followed by Rosneft, Gazprom Neft and Shell that held 14, 12 and 7 percent share, respectively. Bashneft, ExxonMobil and TNK all held around 7 percent each, followed by Teboil (2 percent) and Hitachi (1 percent). The rest went to other lube manufacturers that held 14 percent of the countrys total hydraulic oils market in 2011.

Traditional oil export destinations for Russian hydraulic oils are Kazakhstan, Ukraine, Belarus, Lithuania, Mongolia and Turkey. The countrys producers shipped about 12,000 tons of hydraulic oils to these countries in 2011. [Unfortunately], around 83 percent of these oils are low-quality hydraulic fluids, Sobolev noted.