After picking up at the start of this decade, the penetration of synthetic lubricants in Russia suffered a setback in 2014. Since then, the popularity of those products has begun to recover, and industry insiders say it should grow going forward.

Demand for synthetics as a portion of total Russian lube demand peaked in 2013 at 27 percent, according to Kline & Co. That was still significantly behind mature markets such as Western Europe, where synthetics constitute around 40 percent of demand. Russia fell further behind in 2014, when penetration of synthetics dipped to 21 percent. In 2015, the portion rose slightly to 22 percent.

According to industry sources, the shift toward synthetics was halted by a number of factors, including an overall decline in lubricant demand and the state-sponsored import substitution policy. In addition, the steep ruble devaluation made imported synthetic and semisynthetic products less affordable for Russian consumers. The sluggish upward trend is expected to continue, with a recovery projected in 2017, said Gabriel Tarle, Klines senior analyst, who is based in Prague.

The Russian economys second year of recession was fueled primarily by international sanctions and low oil prices. The weak economy, steep ruble devaluation and slumped lubricant production volumes in 2014 and 2015 were all negative factors for synthetic and semisynthetic product sales in Russia, Victor Pushkarev, head of Moscow-based consultancy Autostat, said in an interview.

Autostat, which focuses on trends in Russias automotive lubricant market, said its underlying fundamentals point toward a shift to synthetics and semisynthetics in the near future. The Russian passenger car vehicle population that drives synthetic and semisynthetic sales increased tremendously since 2010, he said. The share of passenger cars in Russias vehicle population increased from 40 percent in 2010 to 57 percent in 2015.

The consultancy found that around 80 percent of foreign-branded cars sold in Russia carry original equipment manufacturer recommendations for synthetic oils. In 2016, Autostat found that 47 percent of the countrys motorists responded positively when asked if they regularly fill their engines with synthetic motor oils. If we go across all vehicle segments, including the heavy-duty and light commercial, the penetration of synthetic and semisynthetic motor oils could be around 25 percent, close to Klines estimates, Pushkarev indicated.

AvtoVaz, Russias leading car maker, confirmed that that the penetration of synthetic products grew rapidly in the past six years. Russia recorded 1.4 million passenger car sales in 2016, of which Avtovazs Lada brand accounted for 266,200 units. Sergey Protiven, Avtovazs head specialist for fuels and lubricants, said during an interview that starting in 2012, Ladas transmissions were filled with semisynthetic oils. This practice was extended to engine oils starting in 2013.

Growing car sales in Russias Arctic regions, where harsh winter conditions reign, is another factor signaling greater penetration of synthetic products going forward. As sales in these regions increase, they will need more and more low-viscosity synthetic oils, Protiven said. Russian lube manufacturers are also increasingly using Russian-made Group III base oils, making their finished products competitive with imported products, he said.