Nynas has received approval from the European Commission to take over production and responsibility for the base oil plant and associated production units at the Harburg refinery in Hamburg, Germany. Takeover of the first part of the refinery assets is targeted for January 1.

The plant will produce up to 350,000 tons per year of specialty oils. This represents a forty percent increase in the companys supply capability of naphthenic specialty oils. In the first phase of the takeover, Nynas will take on approximately 90 Shell employees. This number will grow to 220 after two years. With this agreement, Nynas will not take over any customers, sales or marketing assets from Shell.

The addition of Harburg to Nynas supply system is an important step forward in [our] growth strategy, said Staffan Lennstrrm, CEO of Nynas. We will increase volumes of all products in our current range off naphthenic specialty oils. With the new capacity, we can reinforce our delivery performance and quickly meet the growing demand from our customers around the world.

Over the next two years, Harburg will be converted into a stand-alone specialty oil refinery. From the beginning of 2014, Nynas will operate the base oil unit and associated refining facilities on the southern part of the site. A hydrogen production plant will be built and operated by a third party supplier, and Nynas will modify plants for specialty oils production on the northern part of the site. After the conversion project, Nynas will take over all operations of the new specialty oils refinery.

Russian Lube Volumes Inch Up

Lubricant production in Russia is expected to grow 2 to 3 percent by 2016, driven by automotive and industrial growth, introduction of higher quality oils and increased petroleum production, a market study found. Russias economy and budget have always relied on crude and petrochemicals production, Moscow-based Discovery Research Group (DRG) found in its recent study, Market Analysis of Petroleum Oils in Russia: Motor, Industrial and Transmission Oils.

An integral part of this production is the manufacture of lubricants. In 2012, the country produced 1.46 million tons of lubes, and motor oils held the biggest share, accounting for 43.5 percent, or 634,000 tons of the total volume, DRG said. Russia produced 622,000 tons of industrial oils in 2012 and 54,000 tons of transmission fluids, according to DRG. In the last few years we observed industrial oil demand growth driven by the countrys growing industrial production – in particular, in the metallurgy industry for production of alloyed materials.

Last year, industrial oils accounted for 42.6 percent of the total oil market, followed by hydraulic oils (5.2 percent) and power generation [turbine and gear] oils (5 percent). In 2012, transmission fluids held 3.7 percent of the total lubes market.

The production of motor oils dropped by 50,000 tons compared to 2011, when 684,000 tons of motor lubes were produced. Diesel engine oils amounted to 418,000 tons, followed by gasoline engine oils (203,000 tons) and aviation oils (13,000 tons), said DRG.

The consultancy also found that imported motor oils held a bigger share compared to oils produced in the country. In 2011, imported oils accounted for 58.7 percent of the total sales volume in the country, or 4 percent more than in 2010, DRG said. Last year, Russian companies held 41 percent of total motor oil sales, and the biggest motor oil marketers were Lukoil, Rosneft, TNK-BP (acquired by Rosneft earlier this year) and Delfin Group, an independent lube producer. The biggest importers were Shell, ExxonMobil, BP, South Koreas SK Lubricants and Frances Total.

In 2012, Russias domestic consumption of motor oils accounted for 53.3 percent of the total volume, while the rest was exported. We observed a similar situation in 2011, and a conclusion can be drawn that the Russian motor oil market relies heavily on export, which is a very attractive [driving factor] for the countrys lube manufacturers to develop their trade business, DRG said.

Lukoil is the biggest lubricants marketer in Russia and produced almost half of the countrys total lubricants and base oils. It was followed by Rosneft, Gazprom Neft, TNK-BP, Bashneft and Russneft.

Russia is the worlds fifth largest lubricants market. Analytics say that the Russian lubricants market is experiencing favorable times. We expect the market to grow 2 to 3 percent by 2016 and for this trend to continue to 2020, DRG said.

There are a few factors that constrain this development, such as lower crude oil market prices and obsolete [lubricants and base oil] production capacities, many of which were built in the 1950s, DRG said, adding that in 2013 it expects a 5 percent slump in motor oil consumption, as a result of the slower demand for diesel engine oils.

The biggest problem impacting the countrys lubricants production is the proliferation of counterfeit products. The more popular an engine oil brand is, the more it is prone to bogus production. This also applies to the cheaper domestic brands, DRG said.

The market study can be purchased at http://www.drgroup.ru/459-analiz-rinka-neftyanix-masel-v-rossii-motorie-transmissionnie-i-industrialnie.html

Synlubes Made in Nigeria

Lubcon Nigeria Ltd. has produced Rugged Elite 5W-40, a synthetic motor oil that claims to be the first synthetic lubricant manufactured in the African country. As far as we know, all the 100 percent synthetic [lubricants] sold in Nigeria are imported, Taiye Williams, managing director of Lubcon, told Lube Report. Rugged Elite will therefore be the first indigenous 100 percent synthetic motor oil. It is made strictly with API Group III base oil.

The Lubricants Producer Association of Nigeria (Lupan) described the product as a welcome development. Lupan said it is elated at the enterprising venture of an indigenous company into a virtually alien terrain in the manufacture of lubricants in Nigeria. Emeka Obidike, Lupans executive secretary, said the manufacture of synthetic lubricants in the country disproves the thinking that local production of foreign products is not feasible without a compromise in quality.

Synthetic lubricants comprise four percent of Nigerias lubes market, according to Lupan. The association is enthusiastic about Lubcons new product because it anticipates that a locally manufactured synthetic lubricant will elicit interest and consequently more demand for synthetics in the country. However, some industry sources expressed skepticism.

Dr. John Erinne, chief executive officer of Matrix Petro-Chem Ltd., said Lupans excitement may not translate to marketplace reality. These synthetics are very expensive, and the Nigerian market is very price sensitive. Since all the ingredients for local production are necessarily imported, the products are not likely to be significantly cheaper than imported products, Erinne said.

Lubcons Williams emphasized that synthetic lubricants are not about numbers alone but about an upgrade in lubricant quality for both the market and consumers in Nigeria. It will further confirm how the company is focused on quality and best practices, Williams said. Internally we had to set up a stringent system to meet the requirements for the production of Rugged. We think it is well worth it.

Lukoil Grows Marine Lubes

Russian oil major Lukoils marine lubricants division recently posted strong results for 2012, with increased sales compared to 2011, new market expansions and dozens of factory-fill tenders secured. For the 2012 financial year, Lukoil Marine Lubricants Ltd.s revenue soared to U.S $200 million, a 75 percent increase compared to the year before.

Our efforts are focused on production of new, high quality marine oils that reduce oil consumption and reduce engine wear, Stefan Claussen, technical and marketing director at the companys Hamburg office said. The main reason for the companys demonstration of excellent results is that, contrary to our competitors, we are persistently expanding our global network. Our lubricants are now more readily available in many ports than those of other suppliers.

Created in 2008, Lukoil Marine Lubricants is a division of the companys lube arm LLK International. It has experienced fast expansion abroad with new operating offices in Germany, United Arab Emirates, Singapore and the United States. Since entering the global lubricants market, Lukoil has viewed Hamburg as a key location for its technical expertise. Here, we are close to our customers. Germany and Hamburg in particular continue to be among the worlds most important centers for the shipping industry. The combination of Russian raw materials, world leading additive technology and German engineering has been an important factor in our success, Claussen said.

Weve managed to build a truly global, efficient organization which is now the fastest growing company in the industry, said Victor Zhuravskiy, the companys general director. We have everything in our hands and confidence that we will continue to expand our business on a long-term basis.

Last year, the company broadened its presence in South Korea, Taiwan, India and Bangladesh, as well Saudi Arabia. This expansion resulted in Lukoil reaching 3 percent of the global marine lubricants market. LLK said.

The worldwide maritime lubricants market has undergone marked consolidation the past decade, from over a dozen suppliers in 2000 to only five big players dominating the scene today, according to LLK. Our focus is an early stage of development of new high-grade oils for ship engines, which reduce both [oil] consumption, and wear and tear, Claussen said.

In 2012, the company won 50 marine lubes supply tenders and during the last two years it secured factory fill tenders for more than 100 new large capacity vessels that are under construction or have already launched. LLKs marine oils made supply deals for the most prospective and large ships currently under construction such as container vessels and super tankers. For this kind of ship, the company secured 50 supply tenders in 2012, 2013 and 2014, the company said.

PetroSA Considers Increased Stake in Engen

According to media reports, South Africas state-owned oil company, PetroSA, is considering buying the controlling stake in Engen, the countrys biggest fuel retailer, now held by Malaysias state oil company, Petronas. Petronas holds 80 percent of Engen, and Pembani Group Ltd. of Johannesburg owns the other 20 percent.

Cape Town-based PetroSA will conduct due diligence over the next three to six months before making a decision on the acquisition. The company operates a 45,000 barrel-per-day natural gas-fuel refinery at Mossel Bay and is planning to build a crude oil refinery near Port Elizabeth in Eastern Cape Province. Engen operates in more than 20 African countries and has a 135,000-b/d refinery and lubricating oil blending plant in Durban.

Delfin Says, Were Not Closing

A Delfin Group Worldwide official announced in August that Delfin Group USAs Charleston, South Carolina, U.S., blending plant will continue to operate, denying industry rumors that the plant may close. In a press release, Timur Sabirov, vice president of operations for Delfin Group Worldwide, said, The Delfin Group USA Charleston plant will remain in operation under the leadership of General Manager Billy Ackerman, and with a strong administration and operational team. The plant continues to show rapid growth and is a vital part of Delfin Groups worldwide oil and lubes businesses.

Delfin Group USA is a division of Moscow-based Delfin Group Russia, which is part of Delfin Group Worldwide. The division terminated company President John Gordon in late April. The lube blender had fired its previous president, Markos Baghdasarian, in September 2012 following his arrest in May last year on charges of exporting aviation oils in violation of a U.S. economic embargo in Iran.

Oman Seeks Lubechem Stake

Distributor Oman Oil Marketing is negotiating to acquire a 40 percent share in blender Lubechem International Industry, of the United Arab Emirates, for 1.5 million dirham (306,000). According to a July 21 Oman Oil filing with the Muscat Securities Market, the primary business purpose of Lubechem is the manufacturing and blending of greases, lubricants and chemicals, and this acquisition is expected to enhance the ability of [Oman Oil Marketing Co.] in its lubricants vertical supply chain integration process.

The transaction is expected to be concluded within 30 days of the securities market filing date. According to its web site, Oman Oil Marketing is the sole distributor of Castrol and BP branded lubricants in Oman, servicing market segments such as commercial and industrial, franchise work ships, rigs, transport companies and the government. The company also operates nine LubePlus quick lube facilities.