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February 13, 2018

Volume 1 Issue 7

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Shell Still Aims High in Russia

Shell, the world’s leading lubricant marketer, has seen its business in Russia grow slower than intended, but it still considers the country a strategic hub for expansion of its business in the region.

In 2012 the company opened a plant in Torzhok, a city 240 kilometers northwest of Moscow, with capacity to produce 180,000 metric tons per year.

Since then, the plant increased its utilization gradually – to nearly 60 percent of capacity in 2017. Shell said Monday that it still sees plenty of opportunity for growth in the region, and aims to continue ramping up output over the next decade.

Shell’s subsidiary in Russia, Shell Neft, recorded 106 million tons of finished lube sales in Russia and neighboring countries in 2017, according to a Feb. 8 news release. The company added that it aims to have sales reach 180,000 t/y by 2027.

Originally the company expected the plant to approach maximum output much earlier. In 2013, officials at the plant told Lube Report that they expected to reach the maximum output as early as 2015.

However, the strains caused by the country’s long standoff with the West and international economic sanctions over the armed conflict in Ukraine snowballed into a recession that hampered Russian lube consumption. In addition, protectionist policies of the government – known as the import substitution program – improved the market position of large domestic lube marketers.

“Russia, along with China, India, Indonesia and Mexico, is in the forefront of Shell’s expansion strategy, and in these countries we expect the largest growth in the next 10 years,” Shell Neft General Director Sergey Starodubtsev said.

The Torzhok plant supplies automotive lubes and industrial lubricants, such as hydraulic fluids and marine oils, offered under brand names that include Helix, Rimula, Spirax, Tellus and Omala.

Shell Lubricants has been the leading global lubricant producer for 11 years in a row, according to Kline & Co. consultancy. In 2016 it supplied 11 percent of the total global lubricant production, or about 4.5 million tons, the consultancy estimated.

It is a leading lubricant supplier in the United States, Great Britain and Malaysia, while it is among the top three lube suppliers in 13 additional countries such as Argentina, Canada, China, Germany, Austria, Switzerland or Saudi Arabia, according to Kline.

Worldwide, the company operates 44 lubricant blending facilities, 7 base oil plants and 15 grease production sites.

Filling line at Shell's Torzhok blending plant

Photo courtesy of Shell

An operator oversees a filling line at Shell's 180,000 tons per year blending plant in Torzhok, Russia.