Shell Russia is setting its sights on Ukraines lubricants market once its 180,000 tons per year blending plant in Torzhok begins full production, the company said Tuesday.
Now that the plant is operational, [It] brings world-scale production capacity closer to customers, allowing us to supply the fast growing Russian market with a full range of high-quality lubricants, Vera Surzhenko, spokeswoman for Shell Russia, told Lube Report. After the start of commercial production and the plant reaching full capacity, there is a potential to expand markets to Ukraine and some other neighboring countries.
The plant will produce Shells premium Helix line of passenger car motor oils and the heavy duty Rimula brand of engine oil. The plant will produce around 90 different types and brands of lubricants, the company said.
It is a very important market for us, said Sergey Lomov, director of Shell Oil Products Ukraine, a new company assigned to develop Shells lubricants business in Ukraine. Its creation will allow us to improve effectiveness and increase the companys share of the Ukrainian lubricants market.
The company will expand Shells network of official finished lubricants distributors. It will also establish direct contacts with major Ukrainian and international original equipment manufacturers to expand its position on the domestic retail market. Shell plans to open a warehouse for storage of its products in Ukraine.
Until now, finished Shell products sold in Ukraine were imported from Germany. The Torzhok plant is the companys biggest lubricants production enterprise in Europe. Product quality is expected to be the same or be even better than products made in our German plants, Lomov said. He explained that even after the Torzhok plant opens, Ukraine will be still using Shells products made in Germany.
Shell lubricants are currently used for factory fill in the Kremenchug, Ukraine,plant that assembles China’s Geely-brand carsand Korean automaker SsangYong’s SUVs. It alsosupplies Bogdan Motors, theCherkassy, Ukraine, car manufacturer that assembles Hyundais.
Development of the U.S. $100 millionblending plant in Torzhok was a difficult venture for Shell because of developmental issues and delays in the supply of materials and in construction. The opening was delayed twice, once from the end of 2010 to December 2011 and again to mid-2012.
The motor and transmission oil market in Ukraine is growing and the volume of finished products sold is around 100,000 tons annually. The countrys total finished lubricants market, estimated at around 350,000 tons per year, is the seventh largest in Europe, according toindustry sources.
Shell has been operating a network of approximately 170 gas stations in Ukraine since 2006.