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April 20, 2016

Volume 17 Issue 52

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Lukoil Base Oil Production Slid in 2015

Russia’s largest base oil refiner, Lukoil, produced around 860,000 metric tons of base oils in 2015, down 10 percent from 973,000 tons the year before. The production comes from the company’s base oil plants in Perm and Volgograd, Russia.

“Around 40 percent of Lukoil’s base oil production is actually exported,” Elena Fedoseeva, head of the company’s base oil sales unit, told Lube Report last week. “In general, the base oil export volumes have been decreasing in recent years, but it was somewhat offset by stronger domestic consumption.”

Photo: Lukoil

Lukoil plans to introduce its proprietary technology for production of Group II and Group III base oils by 2018 at the base oil plant at its refinery in Volgograd, Russia.

In 2015, Lukoil used more than half of its output for in-house blending of finished lubricants. “In addition, around 230,000 tons were shipped to Lukoil affiliated companies, and around 150,000 tons were sold to other lube producers and traders.”

The company’s current product portfolio consists of Group I solvent neutral 150, SN350, SN500, SN600, SN650, SN800 and SN900 stocks, as well as a 4 centiStoke Group III base oil.

“At the moment we ship our products to more than 30 countries, including such destinations as the United States, China, South Korea, Singapore, India, Vietnam, United Arab Emirates, Israel, Spain, Italy, Bulgaria, Greece and others,” Fedoseeva said, adding that the company mainly ships products through three ports: the Baltic Sea port Svetly in Kaliningrad, and the Black Sea ports of Kavkaz and Novorossiysk.

The company is preparing to introduce its proprietary technology for production of Group II and Group III base oils. “We’ve opted to not buy technology from the international oil majors but instead with the help of our specialists to establish Lukoil’s patented high quality base oil production technology,” Fedoseeva said. "Having in mind our leadership in the market, the investment recoupment will be much faster because we invest much less, tens of millions of [U.S.] dollars, contrary to the other players that paid hundreds of millions [in U.S. dollars] for technologies developed by other international oil majors.”

The other Russian oil majors that announced plans to upgrade their base oil production are Rosneft, Gazprom Neft and their 50-50 joint venture Slavneft. Rosneft has begun modernizing its base oil plants in Angarsk – using technology from ExxonMobil Research and Engineering – and in Novokuibyshevsk, using technologies from both ExxonMobil Research and Engineering and Chevron Lummus, according to the Moscow-based research and design institute VNIPIneft.

Gazprom Neft’s Omsk base oil plant is set to employ hydrodewaxing and hydrofinishing technology licensed from an unspecified international oil major. The same is the case for Slavneft’s base oil unit, which will employ hydrodewaxing and hydrofinishing of hydrocracked fuel residue, VNIPIneft said.

Lukoil expects to begin operating with the new technology in Volgograd by 2018, according to Fedoseeva. The base oil plant there currently has 30,000 t/y Group III production capacity.

The base oil units in Volgograd and Perm have capacity to produce 520,000 t/y and a 480,000 t/y of Group I base oil, respectively.

After the revamp, the Volgograd plant is expected to produce 130,000 t/y of Group I, 230,000 t/y of Group II, and 35,000 t/y of Group III base oils, according to VNIPIneft. Perm is also set for modernization, and the revamp could enable it to manufacture 350,000 t/y of Group II base oil, the institute said.

Lukoil closed a Group I base oil plant in Nizhny Novgorod in April 2015.