The first operation will be focused on setting up a collection system in St. Petersburg and the Leningrad region in Northwest Russia. After that the company plans to expand its operations to other regions.

STR Tecoil plans to implement its certified system for the collection of waste oil in St. Petersburg, where it will open a reception point on up to 3,000 square meters of a large land plot by late 2019. Currently, the company is establishing a subsidiary for its operations there and is actively searching for a land plot for the reception point.

The company estimates that around 20,000 tons of waste oil is collected in St. Petersburg each year, and only 3,000 tons to 5,000 tons of it is used for rerefined lubricants; the rest is used as fuel for heating or mixed with the marine fuels.

STR Tecoil aims to collect 10,000 tons of used oils annually in the Northwest region, according to estimates by Mihail Malkov, STR Tecoils chief operating officer. In general, at least 40 percent of all waste oil could be collected and turned into a resource for new products. The environmental impact of our planned operations is therefore significant, he said in a recent NEFCO news release.

The Russian waste lubricants market is the largest in Europe. It is estimated that about 1.2 million tons of used lubes are generated in Russia annually. While at least half of it is formally documented as such, only 100,000 tons can be recycled or processed into base oils, according to the Russian Waste Recycling Association. STR Tecoil found that only 5 percent of the totally generated used oil in Russia is processed for production of base oils.

Russia has capacity to recycle about 100,000 tons of used oil, but this capacity is underused at about 70 percent because lack of raw material and difficulties in collection and transportation, David Esayan, head of the association, told Lube Report.

Incineration or dumping of the used oil is banned by law in Russia, but most often it is used as fuel in heat stoves for heating the space in production facilities, warehouses, garages, car repair shops or service stations.

In St. Petersburg, the collection market is unregulated and led by murky traders that pay in cash for the used oils. STR Tecoils challenge will be how to compete with these black market players.

The price difference between unaccounted used oil that is collected by these black traders that usually resell it, and the documented used oil collected by licensed entities is about 20 percent, according to the association.

There are myriad of fake products and licenses on the black market which is very resilient, capturing around 70 to 90 percent of Russias used oil collection. It is very hard to be competitive in such an environment, Esayan said.

Malkov said that the collected base oil will be shipped for processing at STR Tecoils 60,000 t/y processing capacity rerefinery in Hamina, Finland, located near the border with Russia. The company confirmed that if its St. Petersburg operation is successful its further plans include construction of a rerefinery in Russia.

The Hamina rerefinery can produce API Group II base oils, as well as bitumen and gas oil.

STR Tecoil holds 90 percent of Finlands used oil processing and collects 50 percent of the used oil generated in the country. In 2017, the companys earnings amounted to 27.3 million (U.S. $30.9 million).