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May 29, 2018

Volume 3 Issue 3

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Oil Collection Tough for Russian Rerefiners

MOSCOW – Russian rerefiner efforts to collect used oil are being hindered by the popularity of burning it for fuel and by the inability of authorities to implement new waste regulations, an industry insider said last week.

Participants at GBC’s Commonwealth of Independent States Base Oils and Lubricants conference concluded the main problem is a fledgling black market that absorbs most of the used oil collected in the country.

“This is our biggest challenge: Generators are interested to sell the used oil to collectors that pay high prices, [who usually resell it as fuel] or use it in-house for heating purposes,” Rosa-1 Director Rodion Cherednichenko said during a panel discussion. The company operates Russia’s largest rerefinery.

“The waste-collecting enterprises do not keep records of waste and understate [the volumes they collect],” he continued. “This led to creation of a murky market environment controlled by suspicious players.”

Rosa-1, is the only rerefiner with an extensive network of collection points. At its rerefinery in Ryazan it has capacity to process 40,000 tons per year of waste oils to produce API Group I base oils.

Besides Rosa-1, other Russian companies engaged in collection and recycling of waste oils include 101 Polygon, Mosecopartner, Ros-util, Inter Green and a few others.

Russia generates approximately 1.2 million tons of used oils annually, but in 2017 only 500,000 tons of that volume was collected, according to David Esayan, president of the Waste Recycling Association.

“About 70 utility companies process or recycle the collected waste oil in different forms, the rest is sold as fuel for heating or just disposed of in landfills or in waterways,” he said during the panel discussion.

The association’s primary function is to organize efficient waste oil collection and recycling, but the lack of sufficient interaction between the operators and the local authorities makes this a difficult task.

The 2015 federal law titled “On Production and Consumption of Wastes” – along with related subsequent acts – categorizes used lubricants as hazardous waste and prohibits their disposal in land or water. It also prohibits incineration without prior removal of all heavy metals.

Under that law, responsibility for recycling is assigned to producers and importers of finished lubricants. Companies can either pay a special environmental fee or organize the collection and subsequent regeneration of the waste. Large oil majors usually opt for the former; other generators just sell the waste oil at market price.

“Given the market value of used oils and the costs of regeneration, the market value of the finished lubricant becomes too high, and such a scheme is economically inefficient for the producers,” said Elmira Gabidullina, marketing manager at GBC.

The Russian laws draw from regulations in the European Union, where waste collection and processing is in some cases subsidized by government and industry.

In Italy and Spain, for example, lubricant manufacturers make contributions to funds used to subsidize organizations involved in collection or processing of used lubricants. Collection rates of used lubes in the European Union, are above 70 percent.

“Independent rerefiners are not supported on both fronts. The private and public sectors both have to show creativity in social and educational advertisement and in marketing initiatives that teach the population how collection and recycling of any kind of waste benefits the environment and the people’s health,” Gabidullina said.

Protests against the cartel-like waste management system organized by private business and authorities have broken out in many Russian cities on grounds that the system led to minimal investments in modern waste recycling technology and uncontrolled creation of waste dumps and landfills.