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January 27, 2016

Volume 17 Issue 52

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Agrinol, East Petronics Ally in Georgia, Latvia

Ukrainian lubricant manufacturer Agrinol and East Petronics Ltd. of the United Arab Emirates plan to open blending plants in Georgia and Latvia.

The companies, which have been partners since 2012, said the projects are financed by international investors. Each plant is being designed with capacity of about 10,000 tons per year.

“This past fall we broke ground on the Georgia plant. It’s under construction now, and the [start-up] is expected by June,” Julia Govorova, foreign trade department manager at the Agrinol group of companies, said in an interview. “The Latvia site is in a planning phase, and the inauguration date is not determined yet.”

The blending plant in Latvia will be located in Liepaja, a Baltic Sea port city. The plant in Georgia is being constructed on the site of a former truck assembly plant in Kutaisi, the second largest city in the country after the capital of Tbilisi.

“Our company has great experience in production of high quality lubricating materials, and we aim at constant expansion in international markets,” Dmitriy Koverniy, the head of Agrinol’s import department, said in a Jan. 20 news release. “The joint project with East Petronics is part of the company’s strategy to shift our sales elsewhere.”

Koverny said that after Russia imposed an embargo for many Ukrainian companies, Agrinol lost a market that consumed a substantive part of its production. “In 2014 we stopped exports to Russia. It amounted to a significant volume of our total production, or 15,000 tons of lubricants annually. It hurt our sales and forced us to change our strategy and turn to the other markets.”

Since March 2014, relations between Russia and Ukraine have been tense as a result of the Russian annexation of Crimea and Moscow’s support of an insurgency outbreak in the eastern part of Ukraine.

The business climate in Ukraine is tough because of banking crises triggered by triple-digit devaluation of Ukraine’s currency, the hryvnia. “It led the state to limit access to foreign currencies in the country, a policy that makes a lot of problems when buying feedstock from abroad,” Koverniy said. He added that Agrinol also experiences problems with Ukrainian customs officials when it imports feed stocks, such as base oils. “It is the reason why we decided to move part of our production to other countries close to Europe,” he said.

Agrinol’s partnership with East Petronics began four years ago when the Ukrainian company began toll blending lubricants that East Petronics marketed in the Middle East, Africa and some European countries. “The interaction between us was successful and it led to deepening of our collaboration,” both companies said.

Agrinol is the largest lubricant maker in Ukraine. At its blending plant in Berdyansk it has capacity to produce 50,000 tons of lubricants and 30,000 tons of greases annually. It produces more than 500 types of lubes, greases and coolants and its products are sold in Ukraine, Europe and Asia.

Dubai-based East Petronics Ltd. was founded in 2011. Its main line of business is development of advanced lubricant production technologies. It has representatives in Azerbaijan, Uzbekistan, Kazakhstan, Russia, Latvia and the United Kingdom.