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Russian Lube Demand Slumped in 2014

Russian lubricant demand fell more than 10 percent to 1.5 million metric tons in 2014 due to sluggish industrial output and lower new car sales, a Moscow-based consultancy said. The economy and lubricant demand weakened in the face of sanctions over Russias actions in Ukraine, the steep slide of the ruble in the fourth quarter and low consumer spending, according to InfoTek.

After internal demand stayed sluggish at 1.7 million tons over the last few years, it was reduced to 1.5 million tons in 2014, Boris Sobolev, head of the consultancys oil refining and petrochemicals research department, said in an interview. It is a result of the low industrial output, primarily in machine-building. Weak car sales also contributed.

In 2014, new car sales in Russia declined 10.3 percent to 2.5 million units, down from the 2.8 million units sold in 2013, according to the Association of European Business, a lobbying group based in Moscow. It expects a further 24 percent slump in the countrys new car sales in 2015.

Some lube makers said they experienced slight decreases in production volumes last year. In 2014, our distributors started to order less costly products, said Nikolay Milshin, director of marketing in Delfin Group, an independent lube maker. We answered by formulating products approved by the large OEMs such as Man or Mercedes, which appeased the customers, he said.

Gazpromneft-Lubricants, the third-largest lube maker in the county, produced 485,000 tons of base oils and lubricants in 2014, according to Alexander Trukhan, the companys general director. This is just 5,000 tons less than 2013, although that could be due in part to increased sales in foreign markets. We produce more complex formulations with higher operating properties, and actively develop our export capabilities, Trukhan said.

Delfin and Gazprom both said they increased exports in 2014, at least partially offsetting problems in the home market. Gazprom exported more than 290,000 tons or 60 percent of its total volume in 2014.

Shell Neft, the Anglo-Dutch oil majors representative in Russia, said that the company is staying in the country for the long term. The current political and economic situation has not affected the companys business and development of its production in Russia, said Oksana Kosurova, downstream communications advisor at Shell Neft.

Nigerian Blender to Boost Capacity

Nigerian lubricant producer Conoil will invest 5 billion naira (U.S. $2.5 million) in an additional blending plant in Lagos, with capacity of 60,000 metric tons per year, intended for the Nigerian market. The Lagos-headquarted company already owns a 40,000 t/y plant in Apapa, Lagos, but aims to significantly increase its engine oil production capacity.

This will put the company in good position to take advantage of projected growth in the domestic lubricant market and [increase the] lubricant contribution to its overall turnover, the company said in a press release. The plant will have four filling lines, Biodun Azeez, Conoils head of corporate communication, said in an interview.

Nigerias demand is estimated to be around 515,000 t/y, or about 1 percent of the worlds total demand, and grossed around 150 million naira in 2013, according to Conoil. The new blending plant will also serve as a countervailing force to the proliferation of imported finished lubes into the country.

U.K. Firm Commits to Group I

Tipton, U.K.-based oil and wax blender H&R ChemPharm announced its return to the base oil market by establishing an API Group I base stock storage facility to meet the demand for base oil in the U.K. While it is well documented in the industry that demand for Group I base oil is declining, it continues to be used in less demanding applications such as general purpose oils, gear oils and transformer oils, the company stated in a news release. The companys German parent, The H&R Group, is an established Group I base oil refiner, allowing the business to readily meet market demand.

Kazakhstan Cuts Export Duties

Kazakhstan reduced export duties on lubricants, crude oil and other petroleum products, and identified the lowest acceptable crude oil price that still remains profitable for the government. The country reduced its lubricant export tax by U.S. $113 per metric ton to $60/t, part of a broader action to reset oil sector duties to align costs of exports from Kazakhstan with international prices. The duty on crude was reduced $80/t to $60/t, while duties on heavy distillates, gasoil, liquid fuel, black oil and other products underwent the same change as lubricants.

Tamara Kandelaki, head of Moscow-based consulting firm InfoTek, said in an interview, This is not a crisis measure per-se; the government is just adjusting [to create] more favorable conditions for the exporters.

According to the decree, the government developed the export duties based on the projected average oil price in world markets for 2015, which is $540 per metric ton or less. The countrys oil industry could go bust if crude oil price drops too sharply.

The state controls the countrys oil sector, and most of the states revenues come from oil and gas exports. Kazakhstan has the second-largest oil reserves as well as the second-largest oil production among the former Soviet republics after Russia, according to the U.S. Energy Information Administration.

Ghana Firm Buys Vivo Stake

Vivo Energy reached an agreement with a local investor, CH Group Ltd., to take an 8 percent equity stake in Vivos Ghanaian holdings to meet an oil marketing company license requirement, the companies said in a press statement. Amsterdam-based Vivo Energy took over Shells downstream operations in Ghana in 2013.

Vivo said the completion of the purchase is subject to the satisfaction of certain formalities that are typical for an acquisition of this nature. According to Vivo, completion of the purchase will result in local Ghanaian shareholdings in Vivo Energy Ghana increasing to just over 25 percent, which fulfills the divestment requirements outlined in Vivo Energy Ghanas oil marketing company license.

Adeyemi Abiona, general manager for Lubcon International Ghana operations, said Lubcon is not threatened by the entry of new players in the lubricant market. It wont affect our business because we are in the free trade zone, Abiona said in an interview, referring to the companys site in Tema. Only 30 percent of our products go to the local market while 70 percent is exported to other parts of Africa, and we will still be able to find markets for our 30 percent share.

He cautioned that the Ghanaian business environment is fraught with multiple taxations, which make it difficult for businesses to thrive. We hope that the new entrants will be able to cope with multiple taxations which have discouraged local manufacturing of lubricants in the country, said Abiona. The taxes are so high that there are no local blenders save for Lubcon and Tema Lube Oil Co.; others have packed up.

According to Abiona, many regulatory agencies other than Ghanas National Petroleum Authority even demand taxes in U.S. dollars. This is the reason there are so many warehouses importing finished lubes rather than manufacturing lubricants in Ghana, he added.

BASF to Expand Amines Capacity

BASF announced plans to significantly expand its production capacity for 20 specialty amines at its chemical complex in Ludwigshafen, Germany. The company said it will invest a double-digit million euro amount in expanding its current specialty amines production facilities, gradually bringing them on stream by early 2017.

Specialty amines are used to manufacture coatings, lubricants, crop protection products and pharmaceuticals. BASF amines for lubricants include ethanolamines – which can be used as intermediates in the preparation of water-soluble lubricants, emulsifiers, proprietary corrosion inhibitors and biocides – and ethyleneamines – which are used in ashless dispersants for engine oils and other lubricants.

Mogoil Adds Tech Support

Ana Strassmann Hartwig has joined Mogoils office in Berlin in a technical support role. She has a chemical engineering degree from Brazils University of Blumenau and will lead projects related to sophisticated chemical products.

Omanoil Signs Egyptian Distributor

As part of an international market-penetration strategy, Oman Oil Marketing Co. signed QuadOil as the exclusive dealer of its brand of lubricants in Egypt. Since the launch of the range in 2007, Omanoil has expanded into more than 15 countries, most recently Jordan and Tanzania, with plans to increase its presence in Africa and Asia as well as the Gulf Cooperation Council.

Omanoils premium lubricants range includes Optimo passenger car motor oil and Maximo diesel engine oils for commercial vehicles. Also under the Omanoil brand are Marino oils for fishing and leisure outboard engines and the Ancillary range of products.

U.K. Wax Maker Acquired

Hoganas AB, maker of powdered metals for the metallurgical industry, acquired lubricants manufacturer Abril Industrial Waxes Ltd. effective June 1. Terms were not disclosed.

Abrils waxes and lubricants for industrial purposes and consumer goods will be further developed, Hoganas stated. Production will remain in Pyle, Wales, and Hoganas plans additional investment in the plant, the company stated in a news release.

Melker Jernberg, Hoganas
president and CEO, said the acquisition will allow the company to enhance its expertise in lubricants and further develop its offering of metal powder mixes. Many of the companys products serve as lubricant systems or aim to improve lubrication for metal parts.