Sanctions drafted by the United States senate aim to punish Russian oil companies and banks, but Russian sources insist they will not harm the countrys lubricant industry, which would rely more on local products. However, they warn it could effectively cut the industry off from international markets.
In 2014, confronted with economic sanctions imposed by Western nations, Russias government adopted a policy that encouraged Russian companies to replace imports with products made domestically. Four years later, analysts say the policy has helped domestic lubricant producers gain market share at the expense of importers.
Russias economy is forecast to continue slowly growing, and that should be enough to spur motor oil demand to increase at a compound annual rate of 1.6 percent through 2023, according to a market research firm.
A survey of Russian motorists indicates that a large proportion of them are not following original equipment manufacturers recommendations for viscosity grades and motor oil types when getting their passenger cars oil changed.
Russian authorities adopted a bill that will increase export tariffs for motor oils, fuels and other distillates by 4 percent in 2021.
Lukoil sold 875,000 metric tons of finished lubricants in 2018, up from 863,000 tons in 2017, according to the Russian companys latest performance report. It attributed the increase to growing domestic demand for petrochemical products.
The European Commission last week adopted a quota for API Group II base oil imports, determining that volumes above 400,000 metric tons per year will be subject to duties of 3.7 percent.
Inflation and declining consumer incomes would typically encourage online purchases of lubricants, where prices are normally cheaper. But a recent study found that online transactions still account for just 5 percent of lube sales in Russia, which is afflicted by those maladies.
Russian lubricant producers supplied 65 percent of heavy-duty engine oils used in the country in 2018, while foreign marketers and original equipment manufacturers supplied 28 percent and 7 percent, respectively, a consultancy found.
Lukoil says a blending plant that it is building in Kazakhstan will still open on time early next year, despite a legal dispute between the oil company and a local contractor working on the project.