Following the lead of the oil majors, the Big Four additive companies—Infineum, Chevron Oronite, Lubrizol and Afton Chemical—also bid adieu to their business dealings in the country. Together, the four companies supply the majority of the world’s lubricant additive packages.

Additive packages consist of all the individual chemical additives or components that go into a lubricant, combined with enough base oil diluent in which they can be dissolved. Additive package suppliers usually conduct extensive research to develop formulations that meet finished lubricant performance specifications. Additive companies also pay for testing at independent laboratories to document performance. Consequently, they supply not only the ingredients that are blended with base oils to make finished lubricants but formulary knowledge for the finished lubricants. They also provide the documentation that lubricant companies need to prove that their products meet performance standards.

In an article in the September 2022 issue of Lubes’n’Greases, industry experts predicted that the exit of the major additive makers from Russia would create a sizeable hole in the country’s blending capabilities by lessening supply and inhibiting the production of finished products that meet modern specifications. The article also speculated that the country would likely turn to Asian countries, namely China, to help fill the gap. 

Now, it is clear that both of these predictions came to fruition. But what other changes to the Russian market have arisen as a result of the Big Four’s withdrawal from the country?

New Trading Partners

How have Russian lubricant and additive import dynamics changed since February last year, and who are the most notable international players now doing business with Russia?

In 2022, Russia imported 189,000 tons of passenger car motor oils and 93,000 tons of commercial vehicle lubricants, according to Moscow-based consultancy B2X. The year prior, the country imported about 7,000 tons less of PCMO and 15,000 tons more of commercial vehicle lubricants.

Overall, B2X estimated that Russian imports fell 14% last year.

In its annual study—entitled Russian Market of Motor Oils for Passenger Cars and Commercial Vehicles—Moscow-based consulting firm Autostat, which operates in Russia’s automotive sector, found that European suppliers accounted for 71% of the total motor oil imports in the country in 2021. This share fell to 46% in 2022. 

North American motor oil imports to Russia also fell, dipping from 3% in 2021 to 1% in 2022.

“The motor oil supplies from the Asian countries more than doubled in 2022—from 26% to 53% of the total imports,” the firm noted. “These suppliers became leaders in the total imported volumes.”

Artem Mazaev, a Moscow-based consultant, told Lubes’n’Greases that the temporary deficit of lubricant supply in Russia during the first few months in 2022 was quickly compensated at the start of the new year by suppliers from the United Arab Emirates, Turkey, South Korea, China and India. 

Most of the lubricants and lubricant additives are not among the categories of products that Western countries banned from being exported to Russia. And while some companies headquartered in the West withdrew from the country to express their own protest, other smaller European, Korean or Japanese lubricant makers either continued with preexisting Russian operations or took opportunities to enter a market that was ripe with opportunity.

German finished lubricant brands Bizol, Fosser and Fuchs SE as well as South Korea’s SK Group and a Chevron joint venture in South Korea were accused by some observers of cashing out war profits by retaining or expanding their operations in Russia despite the Western oil majors’ absolute pullbacks.

What does trade of finished lubricants have to do with the withdrawal of the major additive companies?

As shown, Russia’s lubricants market has struggled to import finished products to meet demand, but it has also struggled to formulate its own lubricants, as difficulty with lubricant additive supply has complicated blending efforts. Without access to reputable lubricant additive packages from the major lubricant additive suppliers, Russian lubricant marketers have reportedly turned to sources in other countries to replace the packages that they were previously buying from the Big Four. There are a few such suppliers around the world, but most lack the technology to meet the latest engine oil specifications.

For instance, Richful Lube Additive Co., sells additive components and some packages—including packages that meet API SP, API SN and API SM, the three latest passenger car engine oil specifications adopted by the American Petroleum Institute for the North American car market. But Richful—which is headquartered in Xinxiang, China—does not offer packages meeting recent specifications developed by many European original equipment manufacturers or the European Automobile Manufacturers Association. 

The Russian car parc is largely made up of European models. 

Domestic Supplier Steps Up

One domestic player that is most likely making large gains amid this extraordinary situation is lubricant additive maker AddiTech. The joint venture between the Russian and Belarusian oil majors Lukoil and Naftan—formerly known as LLK-Naftan—reported recently that it expanded its production capacity to 40,000 tons per year in 2022. This represents a doubling of its capacity since 2016.

“On our 10th anniversary, we managed to reach a milestone of up to 20,000 tons per year of produced lubricant additives,” the company told a reporter during a press tour to the plant’s premises in May. “By the end of 2022, the enterprise doubled its production capacity to 40,000 t/y.”

It added that the geography of its sales includes 27 different countries.

Lukoil owns a controlling 50% stake in the firm, which is located in Novopolotsk. Belarus Naftan holds 47%, while 3% of the venture’s shares were redistributed to the local government of Novopolotsk.

AddiTech is the only large Russian additive producer. The company claims that currently it is developing additive packages for motor oils in accordance with the latest European Automobile Manufacturer’s Association (ACEA) and American Petroleum Institute (API) standards. 

The API and ACEA regularly update their engine oil specifications for the latest vehicle models, reflecting the high standards of the Western industry for ever-increasing fuel economy and reduced emissions.

AddiTech said that it produces succinimide additives used to prevent sludge, soot, oxidation products, and other deposit precursors dispersed in engine oil. It also produces dithiophosphate, sulfonate and alkylphenol additives, which can be used in engine oil formulations as detergents, dispersants, acid neutralizers, corrosion inhibitors or antiwear agents.

Car Parc Dictates Demand?

A major indicator that the Russian market is changing is the increasing number of Chinese car brands that have actively penetrated the Russian roads, filling the gap left by the exit of the Western car brands, such as Volkswagen, BMW, Mercedes-Benz, Renault-Nissan or Peugeot.

However, the Chinese car brands in Russia’s on-road vehicle fleet is not large enough to affect the country’s automotive lubricant market, according to Viktor Pushkarev, senior analyst with Autostat. 

“Yes, a dynamic sale of Chinese cars is going on right now in Russia, but the total share of the Chinese cars in the country’s active vehicle fleet is still relatively small,” he said. 

The consultancy estimates that the Chinese car brands constitute around 2.5% of the total active passenger car fleet in Russia. Pushkarev expects that Chinese brand passenger cars will be added into the Russian active car fleet at a rate of 0.3% to 0.5% annually over the next few years.

Russia’s active passenger car fleet amounted to about 35 million units in 2022, according to Autostat.

Will this evolving car parc affect the quantity or type of lubricants—and lubricant components—needed in the country?

Autostat’s Pushkarev is unsure what the future may hold, but he predicts a greater demand for API-compliant products, rather than those meeting European specifications. “However, it is too early to say how this would influence the country’s lubricant demand,” he said. “We can assume that oils made under API specifications will be more in demand compared to those made under ACEA specs.”

He added that the engine oils with API specifications would be more in demand in Russia because “from the beginning [of the development of the Russian lubricant industry in the 1990s], the leading Russian lubricant makers have always been oriented toward formulating oils with API specs.”

A Permanent Change?

Significant quantities of finished lubricant and additive replacements have been supplied to Russia by Asian countries, namely China. Because Russia’s invasion of Ukraine has persisted for some time, many industry experts expect that these new trade partnerships are essentially irreversible. 

“The market is turning upside down—from being dominated by European and Western brands to becoming overwhelmed by Asian brands,” Mazaev told Lubes’n’Greases.

Mazaev added that this shift toward Asian products is happening “unusually fast, and it is probably irrevocable.”  

Boris Kamchev is a staff writer with Lubes’n’Greases. Contact him at Boris@LubesnGreases.com