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EUROPEMIDDLE EASTAFRICA

Number 23

January/February 2011

Fallout FromIranian Sanctions

Gazprom RevampsLubes Business

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At the December ICIS Pan-American Base Oils & Lubricants Conference

near New York City, Solomon Associ-ates’ Jamie Brunk gave one of the best presentations I’ve ever heard. Jamie had analyzed 16 years of data on lubricant base oil refi neries worldwide – plants that represent about half of the world’s base oil capacity – to identify the four best. “Best” was measured by Solomon’s key metrics of competitiveness and ef-fi ciency. Then he compared those four to all the rest. While the companies re-mained anonymous, one is in Europe, one in North America, and two in Asia. The world’s best “are not always the best at everything,” Jamie said, but “they don’t have fl avor-of-the-month programs. They have sustainable practices.”

While the world’s four best are larger, taking advantage of economies of scale, they include two with solvent refi ning and two with hydroprocessing technolo-gies. “Good performance does not re-quire the newest technology,” Jamie said. And there is no correlation between age and performance. What they do is con-trol cash expenses better than the rest of the world. The world’s best lube refi neries have operating expenses that are half of the others’.

Anyone can cut maintenance costs, but it’s not sustainable, Jamie continued. At the best refi neries, plant managers improve the percent of time the refi nery

is available to operate, and costs come down. The world’s best plants manage turnaround costs; they are not stretch-ing turnaround intervals; they haven’t cut personnel to the bone although they operate with half the workhours; and the best plants have relatively more technical people. I heard that Jamie Brunk will be on the agenda at the ICIS World Base Oils & Lubricants Conference in London 24-25 February. Don’t miss him!

It’s my great pleasure to welcome EMEA’s new art director, Ricardo Lianez, to LNG Publishing Co. While Cardo has spent the past eight years as creative lead for Rosetta Stone, he’s no stranger. He was one of the fi rst designers to work with us when we launched our fl agship publication, Lubes’n’Greases, 17 years ago, and we are thrilled to be working with him again.

The magazine you’re holding contin-ues to grow, both in frequency – eight issues this year – and circulation – over 8,700 audited, qualifi ed subscribers! Managing editor Tim Sullivan, art direc-tor Cardo Lianez, and all of our colleagues at LNG join me in thanking you for your support, and in wishing you a prosperous and peaceful 2011.

—Nancy J. DeMarco [email protected]

World’s Best Lube refi neries

Ricardo Lianez

Nancy J. DeMarco

JANUARY/FEBRUARY 2011 3

PUBLIShER’S LETTER

EUROPE-MIDDLE EAST-AFRICALNG Publishing Co., Inc.6105-G Arlington Blvd.Falls Church, VA 22044 USAPhone: +1 703-536-0800Fax: +1 703-536-0803Web: www.LNGemea.com, www.LNGpublishing.comEmail: [email protected]

Managing EditorTim SullivanPhone: +1 [email protected]

Art DirectorRicardo Lianez

CirculationSheryl Unangst, ManagerRobert Green, Assistant Manager

Contributing EditorsBoris Kamchev, David Ray, Ray Masson, Mark Townsend, Geeta Agashe, Lisa Tocci, George Gill

PublisherNancy J. DeMarco

Advertising DirectorGloria Steinberg BriskinPhone: +1 [email protected]

Production AssistantMegan Matchett

Lubes’n’Greases Europe-Middle East-Africa (ISSN1935-8490) is an independent trade magazine, published eight times in 2011 by LNG Publishing Co., Inc., 6105-G Arlington Blvd., Falls Church, VA 22044, USA.

Copyright 2011, LNG Publishing Co., Inc.

Printed in the United Kingdom.

Subscriptions are free to qualifi ed subscribers in Europe, the Middle East and Africa who are active in the lubricants industry as manufactur-ers, marketers, volume buyers and users, or as suppliers who maintain close ties to the lubricants industry. Qualifi cation is subject to publisher’s approval.

Subscriptions outside Europe, the Middle East and Africa are U.S. $72 for eight issues; U.S. $136 for 16 issues.

Lubes’n’Greases Europe-Middle East-Africais a registered trademark of LNG Publishing Co., Inc.

LUBES‘N’GREASES EUROPE-MIDDLE EAST-AFRICA4

Features

January/February 2011

Number 23

EUROPEMIDDLE EASTAFRICA

TABLE OFCONTENTS

30 4218

3

6

DePartMeNts

56

58

55

10

Publisher’s Letter

Transportation Trends

Marketing Matters 53

48

14 Base Oil Report

Newsmakers

Classified Ad Advertisers Index

Industry Calendar

Product News

Last Word

18 Tall Task Russia’s Gazprom is trying to build its lubricant business into a larger,

more profitable operation. Doing so could be challenging given the scope of improvements needed and the company’s structure.

24 Bracing for the Cold Two winters ago, Europe saw a spate of engine failures due

to motor oil gelation, and some worry that the problem could grow. The auto and lubricant industries are developing tests to better gauge cold temperature performance.

30 Iran’s Isolation Iran’s lubricant industry is suffering from international

economic sanctions. Trade blocks are hampering domestic suppliers and foreign players doing business there.

36 More Airtime Airlines are spending huge amounts on jets, and they want to get

their money’s worth. One way to do that is by minimizing downtime for maintenance while at the same time ensuring parts are protected.

42 Long on Promise When the Soviet Union broke apart, Ukraine’s grease industry lost

its biggest market and Russia lost its main supplier. Now the industries in both countries are eyeing revival.

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Despite recession, europeans unlikely to Change their Own Oil

Would-be do-it-yourselfers from the United King-dom or elsewhere in Europe should pay attention to the origin or geographical target audience of web-sites that they turn to for instruction. If they do, they will find that many, perhaps most, are for the United States or Canada. This makes sense since DIY is sig-nificantly more common in North America, though rates have declined there, too.

But it’s important to recognize that car culture in the United States is much different than on this side

When I grew up in Plymouth, on the United King-dom’s southern coast, the Second World War

was not long over, and the whole country was pretty much broke. There was little traffic, and we used to play football in the road outside. Few of the inhab-itants of our street owned motor vehicles; the lord mayor had a car, as did the city chief engineer and the doctor, and they all had their cars maintained by garages.

Of the remaining population, very few indeed were fortunate enough to own a car. Those who did carried out their own vehicle maintenance, which in-cluded frequent oil changes. It was commonplace to see vehicles precariously suspended over their own-ers on stands – or less precariously on angle-iron ramps – as they emptied and refilled their crankcases.

Recently I returned to look at the house that I grew up in. Much has changed. There is nowhere to park because there are now more cars than houses, and (probably as a result) there are no kids playing foot-ball in the road. Despite there being more cars on the street that ever before, I note that there is no one un-derneath his car changing the oil.

Of course, that’s not surprising. It’s been well-doc-umented that rates of do-it-yourself oil changes have declined to the point that today they are rare. Still, one wonders if the recent recession might cause a bit of a revival. As money becomes tight, might not people look for services that they themselves can do in order to save money?

It certainly seems feasible that someone who wanted to change his own oil could do so. Finding instructions is easy in the Internet Age. Searching Google for “DIY oil change” generates page upon page of instructions. It is quickly evident, though, that not all of the instructions agree, and this makes in-teresting reading. One article starts with this direc-tion: “Never change the oil while the engine is hot,” whereas others state the importance of ensuring that the oil is hot before draining. There are a number of instructional videos showing people with bare hands covered in used engine oil. Used engine oil contains some nasty substances, and the occupational health nurse at one of my former employers used to tell us to “avoid contact with used engine oil like the plague.”

Continued on page 8

She may top up her oil but probably won’t change it.


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What seems more likely – or at least more plausible – is that Europe could see increases in the number of motorists who take on the task of “topping up” their oil. Of course, add-ing half a liter when needed is much simpler than emptying and refi lling the crankcase. It may also be true that European cars need more top ups than in the U.S., for example; lon-ger intervals between changes means more opportunity for oil levels to dip too low.

BP’s Castrol is one lube marketer that seems to follow this logic. The company’s U.K. website has posted a video of television personality Quentin Wilson explaining how motor-ists can do their own top ups.

There may be a few peo-ple in Europe who decide to change their own oil in order to help their budgets. I sus-pect, however, that most of the inhabitants of the street I grew up on will forgo the ef-fort. My trip back to memory lane was pleasant and pro-vided some food for nostal-gic thought. But I will look for other ways to save money, and I suspect most of my former neighbors will, too.

of the Atlantic, and this ex-tends to oil change practices. Many advisories for U.S. mo-torists recommend that engine oil be changes every 3,000 to 4,000 miles (approximately 4,800 to 6,400 kilometers). Such distances are very short compared to Europe, where automakers call for service in-tervals upwards of 16,000 km, with no requirement for “in-terim” oil changes. A Europe-an motorist following U.S. oil change intervals would prob-ably waste money instead of saving.

A more focused Internet search can still turn up numer-ous websites with advice for Europeans about changing their own oil. Moreover, there are retailers that sell engine oil, along with the few items of ancillary equipment needed to do the job: a funnel, pans to catch the used oil, ramps to raise the car.

Nevertheless, there seems to be consensus that it’s un-likely many Europeans will start doing their own oil changes – recession or no. Even compa-nies that would cater to such practices share this opinion. I contacted Halfords, the U.K.’s largest retailer of aftermarket lubricants and was told most motorists here fi nd little prac-tical benefi t from becoming a DIYer.

That may be due in part to the length of drain intervals in Europe. Fewer oil chang-es mean fewer opportunities to save money. Longer inter-vals also mean oil change due dates are more likely to coin-cide with other maintenance that really does require a pro-fessional mechanic. If a trip to the dealer is necessary any-way, a motorist may be less motivated to climb under the hood himself.

DAVID RAY has 30 years of experience in lubri-cant, fuel, emissions and vehicle testing and test development, and he has served as chairman of many fuel and lubricant committees. He is now director of Draycon Consulting Ltd., in Torpoint, Cornwall, U.K., and can be reached at [email protected]


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synthetic Lubes: Industry sweet spot

use synthetics throughout the downturn. No doubt many are listening to the growing number of original equipment manufacturer recommendations for syn-thetics and have bought into arguments that they help improve fuel economy, enabling longer drain intervals.

Europe enjoys the greatest penetration of synthetics. These premium products are estimated to account for 12 percent of all lubricants consumed in the region and a whopping 23 percent in the con-sumer automotive segment. Use is highest in the European Union sub-region, where superior perfor-mance and environmental benefits are especially val-ued. Consumption in countries such as Germany and the Scandinavian states has reached saturation lev-els. On the other hand, room for substantial growth remains in places such as Russia, Poland and other countries.

Not Just for CarsOutside the passenger car engine oil segment,

synthetic lubes made fewer inroads historically. Globally, they account for only 6 percent of the com-mercial automotive category – engine oils used in on-road heavy-duty diesel trucks – and that level is only expected to rise to 9 percent by 2019. Among indus-trial oils and fluids, refrigeration and compressor oils and metal forming fluids are the applications where synthetics are most commonly selected.

Synthetics account for more than 17 percent of to-tal global refrigeration fluid demand, and that num-ber is expected to climb to 20 percent by 2014 and as high as 30 percent by 2019. Driving this demand will be the transportation equipment industry in the Asia-Pacific region and Brazil, which are becoming leading vehicle manufacturing hubs. In addition, a surge will come from growing demand for consumer air condi-tioning equipment as well as commercial and indus-trial refrigeration equipment in the developing world.

Asia-Pacific is currently the globe’s growth region for total lubricant demand, but it has so far been slow to adopt synthetics. Only 3.5 percent of synthetic lubes are consumed in that region. Even so, as the Asian economies gain momentum, first-time car own-ers here seem more open to using synthetics com-pared to more mature markets where preconceived

Amid a lackluster overall market for finished lubricants, demand for synthetic passenger car

engine oils remains very strong both in Europe and around the world. Once these lubes were reserved for use in high-performance automobiles, makers of which specified synthetics for both factory fill and ongoing maintenance.

In recent years, however, trends such as improved fuel economy and extended drain intervals con-verged to broaden demand for these fluids. At the same time, supply-side dynamics evolve to create a healthy balance of push and pull market drivers that have stimulated growth of synthetics, especially in Europe.

The Big PictureGlobal demand for finished lubricants has de-

clined sharply at the hands of a global recession, but synthetics and synthetic blends have actually gained, going from 0.5 percent penetration in 2007 to 6.1 percent and 4.1 percent of global demand, respec-tively, today. It seems loyal customers continued to

Synthetic engine oils — no longer just for luxury cars.

Continued on page 12


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notions on maintenance prac-tices are handed down “father to son” – and often don’t in-clude synthetics. Asian car owners view vehicles as prized possessions, and in their ef-forts to give them the best care, seem more willing to look beyond conventional oils.

Support from SuppliersOn the supply side of the

equation, strong growth in API Group III base stock ca-pacity is supporting the move toward synthetics. Signifi cant startups of Group III refi neries, including Shell and Qatar Pe-troleum’s plan to start produc-ing Group III base oils at their new Project Pearl gas-to-liquid plant in Qatar, will help to fur-ther drive an increase in Group III-based synthetic lubricants. Meanwhile, national oil com-panies are also now eyeing the market and its barriers to en-try. If some of them construct Group III plants, it could di-lute the prestige of synthetics and perhaps erode the pre-mium pricing that synthetic base stocks currently receive. Or it could lead to more tiers of synthetic lubes and customers concluding that synthetics are not all equal.

Despite their popular-ity in Europe, synthetic lubri-cants still have a relatively small

base on the world stage. But demand for them is expected to grow at an accelerated rate in the future. Global demand for synthetics is forecast to increase 5.5 percent annually through 2014, compared with just 2.8 percent for conventional oils.

With support from OEMs and growing awareness among con-sumers, synthetic lubes should continue to gain popularity in other geographic markets. As base stock supply ramps up to meet demand, this will like-ly help to broaden synthet-ics’ appeal as a cost-effective, practical alternative to conven-tion oils with tangible long-term benefi ts. o

Increased demand for consumer air conditioners is one source of increased demand for synthetic lubes.

GEETA AGASHEGeeta Agashe is vice president, Petroleum and Energy Practice, at Kline and Company, a worldwide consulting and research fi rm. Based in the United States, she can be contacted at [email protected] or +1 973 435 3484.


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Historically, decisions about where to build oil refineries have been based

on supply and logistics, with two basic models prevailing. In some cases, facilities were constructed close to crude oil sourc-es. For example, the Gulf of Mexico coast in the United States became a refining hub because the region was rich in crude. In other cases, refineries were built close to demand centers. On this basis numer-ous facilities were built near the coasts of Western Europe to process crude imports that were shipped to the region.

In all cases, regular trade routes were established for users of the petroleum products from these refineries. Partly be-cause of transportation costs, customers were often in at least relative proximity to the refinery, and over time three main markets developed for base oils and other refined products: the Americas; Europe, Africa and the Middle East; and the rest of Asia and the Pacific Rim. Until 10 or 12 years ago, these markets were relatively insular, with only an occasional oppor-tunistic delivery crossing between them.

Base Oil trade Patterns Keep evolving

For example, bright stock occasionally flowed from the U.S. to West Africa, or solvent neutrals from Argentina or Brazil to Northwest Europe.

Trade patterns changed when catego-ries of base stocks began to expand. North American supply trended from API Group I to Group II oils, while new plants mak-ing Group II and Group III were built along the Pacific Rim. North America had Group II to spare, but it and Europe demanded more Group III than they produced inter-nally. Meanwhile, most of the Group III and Group II production in Asia-Pacific was surplus to local demand and so could be directed elsewhere. At this point, base oil trade started to become truly global.

Of late there have been further devel-opments. Group I material started to go long in the Far East, while remaining short in the U.S. and Europe. Prices started to falter in the Far East, particularly for Group I grades, but since the other markets were short or perhaps in balance, surpluses from Far East production started to find their way to lube blenders normally ser-viced by European and U.S. producers.

Asian Group I deliveries stopped short of Europe, but many blenders and trad-ers were considering orders for areas such as Turkey and other parts of the Eastern Mediterranean, such as Syria and Egypt. Such deals appear to have been relegat-ed to the back burner for the moment, because prices in the Far East started to move upwards, and supplies from main-stream European producers have opened up slightly.



BASE OIL REPORT BY RAY MASSON

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for a new Group II/III plant in Spain could further roil the scene.

Some players view the new trade patterns as a result of globalization of base oil mar-kets, but essentially the op-posite is true. It is the unique features of each market and the differences between them that have caused these pat-terns to develop, breaking down much of the conserv-atism on which the market has traditionally functioned. Economic factors that have affected some areas have not been present in other re-gions, and have stimulated varying rates of growth across the globe. These will con-tinue to play a major part in the industry’s supply/demand scenario.

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With new base oil pro-duction looming large in Qa-tar, Bahrain, China and South America, the supply scene may be about to change yet again. For example, the opening of new facilities in Qatar and Bah-rain will create a giant Group III supply hub in the Middle East and will affect current Group III supplies into Eu-rope, while at the same time maintaining requirements for Group I stocks that must be blended with Group III to pro-duce fi nished lubricants of higher specifi cations. New lo-gistical patterns could be cre-ated again due to these large infl uxes of new supply.

Group II imports into Eu-rope from the U.S and Korea may also be affected, since a large ingress of Group III ma-terial could limit the require-ment for these grades. Plans

RAY MASSON is director of Pumacrown Ltd., a trader and broker of petroleum products in East Grinstead, U.K. Send him comments or topic suggestions at : [email protected]


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oMSk, ruSSia – Lubricants were for years an afterthought for Gazprom, but now the Russian energy giant is bent on that part of its business. The company is upgrading and expanding its finished lubes and base oil production facilities and is striv-ing to increase sales at home and abroad. The pro-gram is Gazprom’s answer to the success of Lukoil, a publicly owned oil major and lubes market leader. But it also raises questions about the ability of a government-controlled business to carry out such dramatic change and to adapt to a rapidly evolving market.

Gazprom’s primary distinction is that it is the world’s largest supplier of natural gas, but the Mos-cow-based company is also a significant petroleum refiner. The refining segment, including its lubricant

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with TNK-BP that owns the 250,000 t/y Yaro-slavneftorgsintez base oil plant in Yaroslavl. It also manages Gazprom Neft Lubricants Italia and its 30,000 t/y Bari, Italy, blending plant, purchased from Chevron in 2009.

Additionally, Gazprom Neft-SM manages an-other share in Slavneft: the lubricants production of Rusoil, operator of the Mendeleev refinery in Konstantinovsky, Yaroslavskaya oblast. This mini refinery, the country’s oldest lubricant plant, has operated under big losses since 2006, according to Russian accounting standards. In 2009 the plant produced only 3,000 tons of lubes.

Slavneft’s shareholders have tried to sell Rusoil twice, in 2007 and in 2010, but without success. One of the biggest reasons is its obsolete techni-cal condition. The plant yearns for investments to modernize its entire refining processes. Russian newspaper Kommersant reported last year that any purchaser would have to double its initial invest-ment – Gazprom and Slavneft were reportedly seeking around U.S. $15 million – to keep up with Euro 4 fuel standards recently adopted by Russian authorities.

The Mendeleev refinery is in some ways symbolic of Gazprom and its lubricants business. From its crude oil extraction and the refining operations to its base oil and lubricants production facilities, Gaz-prom has much need for immediate modernization if it wants to keep up with the dramatic evolution of global energy markets.

Here lies the major question facing Gazprom’s lubricant business: How quickly and adeptly can a company that has focused on natural gas, crude oil, petroleum and diesel products reform managerial and facilities aspects of lubricant operations? The is-sue is how to command and coordinate such diverse operations (including nonessential activities such as a bank, hospitals, football clubs, its own media group) – a challenge that seems especially tall for a state-controlled company. The Russian government owns a 50.02 percent stake in Gazprom.

“A market orientated company which is privately owned could succeed better,” Boris Bunakov, gen-eral director at Nami-Chim, Russian Association of Automotive Engineers, told Lubes’n’Greases during an interview. “I cannot imagine how Gazprom could be able to manage even its lubricants busi-ness. The company might succeed if its lubricants business is controlled by a commercial and private entity, and if it pays more attention and money for the development of science.” To bolster his argu-ment he pointed to the success of Lukoil’s lubes subsidiary LLK-International.

For its part, LLK claims to be pleased by the lubricant-related undertakings of its competitor. “Such a vital competition always helps markets to develop,” said Alexei Fillipov, LLK-International’s

Gazprom’s oil refinery in Omsk. Photo courtesy Gazprom

JANUARY/FEBRUARY 2011LUBES‘N’GREASES EUROPE-MIDDLE EAST-AFRICA 1918

business, is centered in this southwestern Sibe-rian city, 2,700 kilometers east of Moscow. Omsk Refinery sprawls across several square kilometers, with barren plots interspersed between refining units and pipelines. Built in 1955, it is one of the largest refineries in Russia with capacity to process 19.5 million metric tons of crude oil per year and includes a 240,000 t/y base oil plant and finished lubricant blending plant. The overall refinery has 3,600 employees, 640 of whom are devoted to its base oil and lubricants blending facilities.

Striving to ModernizeGazprom Neft-SM, which is headquartered in Moscow, also has several other assets. It has a share in the oil major Slavneft, a 50-50 joint venture

with TNK-BP that owns the 250,000 t/y Yaro-slavneftorgsintez base oil plant in Yaroslavl. It also manages Gazprom Neft Lubricants Italia and its 30,000 t/y Bari, Italy, blending plant, purchased from Chevron in 2009.

Additionally, Gazprom Neft-SM manages an-other share in Slavneft: the lubricants production of Rusoil, operator of the Mendeleev refinery in Konstantinovsky, Yaroslavskaya oblast. This mini refinery, the country’s oldest lubricant plant, has operated under big losses since 2006, according to Russian accounting standards. In 2009 the plant produced only 3,000 tons of lubes.

Slavneft’s shareholders have tried to sell Rusoil twice, in 2007 and in 2010, but without success. One of the biggest reasons is its obsolete techni-cal condition. The plant yearns for investments to modernize its entire refining processes. Russian newspaper Kommersant reported last year that any purchaser would have to double its initial invest-ment – Gazprom and Slavneft were reportedly seeking around U.S. $15 million – to keep up with Euro 4 fuel standards recently adopted by Russian authorities.

The Mendeleev refinery is in some ways symbolic of Gazprom and its lubricants business. From its crude oil extraction and the refining operations to its base oil and lubricants production facilities, Gaz-prom has much need for immediate modernization if it wants to keep up with the dramatic evolution of global energy markets.

Here lies the major question facing Gazprom’s lubricant business: How quickly and adeptly can a company that has focused on natural gas, crude oil, petroleum and diesel products reform managerial and facilities aspects of lubricant operations? The is-sue is how to command and coordinate such diverse operations (including nonessential activities such as a bank, hospitals, football clubs, its own media group) – a challenge that seems especially tall for a state-controlled company. The Russian government owns a 50.02 percent stake in Gazprom.

“A market orientated company which is privately owned could succeed better,” Boris Bunakov, gen-eral director at Nami-Chim, Russian Association of Automotive Engineers, told Lubes’n’Greases during an interview. “I cannot imagine how Gazprom could be able to manage even its lubricants busi-ness. The company might succeed if its lubricants business is controlled by a commercial and private entity, and if it pays more attention and money for the development of science.” To bolster his argu-ment he pointed to the success of Lukoil’s lubes subsidiary LLK-International.

For its part, LLK claims to be pleased by the lubricant-related undertakings of its competitor. “Such a vital competition always helps markets to develop,” said Alexei Fillipov, LLK-International’s

Gazprom’s oil refinery in Omsk. Photo courtesy Gazprom


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At General Petroleum we believe nature and its resources are the greatest gift for humankind. It is a gift that allows us to produce quality petroleum products and services, to fuel development and change our customer's lives. Built on the core values of business integrity, a sense of responsibility, quality consciousness and customer service, General Petroleum is an ISO certified company, headquartered in Frankfurt, Germany with thirty five offices globally spanning Africa, Australia, Europe and the Middle East. Visit our website to find out more about General Petroleum and the fascinating transformation it brings to the world.

A fascinating transformation...

deputy general director for production, science and technology. “Let it be Gazprom Neft, TNK-BP or Rosneft – we hail such a competition. Such strong players and competitors could only result in a more developed market. It is good both for us and for them.” He added that being state controlled is not necessarily a hurdle, as it could have positive and negative effects.

eXpanding aBroad and at hoMeGazprom Neft-SM is one of the 20 biggest lubricant producers in the world, according to the company’s strategic marketing department. With annual sales of less than 250,000 tons in 2008, it is still far behind global leaders such as Shell and ExxonMo-bil, which reportedly sold 4.5 million tons and 4.4 million tons, respectively, in 2008. Lukoil ranked seventh that year with 1.2 million tons.

Gazprom Neft-SM sold 43,000 tons of automo-tive lubricants in Russia in 2009, accounting for 8 percent of the market, according to its own esti-mates. “As one of the key players in the country’s lubricants market, we are strongly committed to in-crease our sales in Russia,” Anton Kiselev, a senior strategic market specialist, said during an interview in Moscow. He added that the company expected to raise its total lubricants sales from 155,000 tons in 2009 to 213,000 tons in 2010. “Over the last couple of years the company has tried to increase its sales in the country as well as in Belarus, Ukraine and in the EU.”

To establish a firm foothold in neighboring lube markets, Gazprom Neft-SM has outsourced

production in Belarus, Ukraine and in Moscow, using contract blenders. In the capital it uses the facilities of independent blender Vial Oil. Parent company Gazprom Neft has dozens of fuel stations in Kazakhstan, which helped establish a strong lube distribution network there.

“As a result, the share of finished lubes sales in these countries has been significantly increased,” Kiselev noted. The Strategic Marketing Department forecast that the company in 2010 would capture approximately 1 percent of Belarus’ 213,000 ton finished lubes market and an equal share of the 345,000 ton Ukrainian market. The proximity of the Omsk plant to Kazakhstan and Gazprom’s network there may have given it a 39 percent share of the country’s 137,000 ton market in 2010. “Gaz-prom Neft’s brands had sales of roughly 7,000 tons in Italy in 2009,” Kiselev remarked, adding that in 2010 those sales were expected to rise to 18,000 tons, or 3 percent of the 613,000 ton Italian market.

2010 marked the start of a three-year plan for Gazprom Neft to invest €133 million in its lubri-cants business. According to Kiselev, management plowed €34 million into manufacturing facilities last year, almost €10 million in marketing and an addi-tional €1.5 million in product development. Similar expenditures are scheduled for 2011 and 2012.

To expand production capabilities, the company recently began construction of a blending plant near the Omsk base oil plant. The new blending plant will have capacity of 70,000 t/y and will be completed by the end of 2012.

“It will boost the annual capacity of our plant to 120,000 tons of finished automotive and industrial lubricants,” Alexandr Chembulaev, head of the Omsk base oil and lubricants plant, said during an interview in his office. He asserted that new stor-age capacity for both raw materials and finished products are due to be ready this year, along with a new packaging line. The plant will increase produc-tion of SibiMotor brand standard engine oils for domestic automobiles and Gazprom Neft brand industrial lubes.

“Production of premium-class G-Energy motor oil, now made in the company’s blending plant in Italy, will be partially carried out there as well,” Chembulaev confirmed. In addition, the com-pany last year introduced a new blending unit for production of hydraulic, compressor and electrical transformer oils.

As part of the strategy to introduce the G-Energy brand in Russia, and to increase the lubes outputs, the company also set up a new 12,000 t/y filling line at Rusoil’s facility in Konstantinovsky. “Our

Workers operate a packaging line at Gazprom’s Omsk lubricant plant. The company acquired the Sibi brand when it bought Omsk Refi nery from Sibneft. Photo by Boris Kamchev



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Afghanistan • Australia • Cameroon • Germany • Ghana • India • Indonesia • Japan • Kazakstan • Kenya • Malawi • Pakistan • Rawanda • Tajikistan • Tanzania • UAE • Uganda • UK • Zambia

At General Petroleum we believe nature and its resources are the greatest gift for humankind. It is a gift that allows us to produce quality petroleum products and services, to fuel development and change our customer's lives. Built on the core values of business integrity, a sense of responsibility, quality consciousness and customer service, General Petroleum is an ISO certified company, headquartered in Frankfurt, Germany with thirty five offices globally spanning Africa, Australia, Europe and the Middle East. Visit our website to find out more about General Petroleum and the fascinating transformation it brings to the world.

A fascinating transformation...

deputy general director for production, science and technology. “Let it be Gazprom Neft, TNK-BP or Rosneft – we hail such a competition. Such strong players and competitors could only result in a more developed market. It is good both for us and for them.” He added that being state controlled is not necessarily a hurdle, as it could have positive and negative effects.

eXpanding aBroad and at hoMeGazprom Neft-SM is one of the 20 biggest lubricant producers in the world, according to the company’s strategic marketing department. With annual sales of less than 250,000 tons in 2008, it is still far behind global leaders such as Shell and ExxonMo-bil, which reportedly sold 4.5 million tons and 4.4 million tons, respectively, in 2008. Lukoil ranked seventh that year with 1.2 million tons.

Gazprom Neft-SM sold 43,000 tons of automo-tive lubricants in Russia in 2009, accounting for 8 percent of the market, according to its own esti-mates. “As one of the key players in the country’s lubricants market, we are strongly committed to in-crease our sales in Russia,” Anton Kiselev, a senior strategic market specialist, said during an interview in Moscow. He added that the company expected to raise its total lubricants sales from 155,000 tons in 2009 to 213,000 tons in 2010. “Over the last couple of years the company has tried to increase its sales in the country as well as in Belarus, Ukraine and in the EU.”

To establish a firm foothold in neighboring lube markets, Gazprom Neft-SM has outsourced

production in Belarus, Ukraine and in Moscow, using contract blenders. In the capital it uses the facilities of independent blender Vial Oil. Parent company Gazprom Neft has dozens of fuel stations in Kazakhstan, which helped establish a strong lube distribution network there.

“As a result, the share of finished lubes sales in these countries has been significantly increased,” Kiselev noted. The Strategic Marketing Department forecast that the company in 2010 would capture approximately 1 percent of Belarus’ 213,000 ton finished lubes market and an equal share of the 345,000 ton Ukrainian market. The proximity of the Omsk plant to Kazakhstan and Gazprom’s network there may have given it a 39 percent share of the country’s 137,000 ton market in 2010. “Gaz-prom Neft’s brands had sales of roughly 7,000 tons in Italy in 2009,” Kiselev remarked, adding that in 2010 those sales were expected to rise to 18,000 tons, or 3 percent of the 613,000 ton Italian market.

2010 marked the start of a three-year plan for Gazprom Neft to invest €133 million in its lubri-cants business. According to Kiselev, management plowed €34 million into manufacturing facilities last year, almost €10 million in marketing and an addi-tional €1.5 million in product development. Similar expenditures are scheduled for 2011 and 2012.

To expand production capabilities, the company recently began construction of a blending plant near the Omsk base oil plant. The new blending plant will have capacity of 70,000 t/y and will be completed by the end of 2012.

“It will boost the annual capacity of our plant to 120,000 tons of finished automotive and industrial lubricants,” Alexandr Chembulaev, head of the Omsk base oil and lubricants plant, said during an interview in his office. He asserted that new stor-age capacity for both raw materials and finished products are due to be ready this year, along with a new packaging line. The plant will increase produc-tion of SibiMotor brand standard engine oils for domestic automobiles and Gazprom Neft brand industrial lubes.

“Production of premium-class G-Energy motor oil, now made in the company’s blending plant in Italy, will be partially carried out there as well,” Chembulaev confirmed. In addition, the com-pany last year introduced a new blending unit for production of hydraulic, compressor and electrical transformer oils.

As part of the strategy to introduce the G-Energy brand in Russia, and to increase the lubes outputs, the company also set up a new 12,000 t/y filling line at Rusoil’s facility in Konstantinovsky. “Our

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production, we are considering introducing hydro-cracking too. Our long-term plans call for breaking ground for this installation in 2014, with Group II and III coming onstream in 2016.”

Gazprom Neft-SM has been developing a base oil and lubricants production strategy since 2006. The operations of the company’s entire lube business were given to the subsidiary Gazprom Neft-SM in late 2007. “Upper management developed this strategy four years ago, and we hope they won’t abandon plans that were committed to,” Pozygun said. “Sibneft, the Omsk refinery’s previous owner, gave priority to fuels production.”

Meanwhile the country’s industrial and auto-motive lubricant market trends have seen drastic changes, and during the last decade every major oil company in Russia has been investing in develop-ment of its own lubricants business. Gazprom completely overturned the Omsk plant’s previous owner’s approach.

In 2005 Gazprom acquired Sibneft’s assets, in-cluding the Omsk refinery, for $13.1 billion, one of the largest corporate takeovers in Russian history. For the past decade, Gazprom’s strategy was aimed at consolidating its numerous assets that range from oil fields and refineries to gas and oil distribution, to base oil and lubes making. Besides the vast Siberian region, its assets are now present in countries like Great Britain, Germany, Serbia and Nigeria, ser-viced roughly by 450,000 employees in Russia and all over the world. Gazprom’s sales in 2009 totaled €70 billion, according to European media reports.

The 1990s were a time of chaotic wheeling and dealing in Russia, and were followed by a decade of consolidation and stagnation, when calculating the losses and gains was the main game of the policy makers in Kremlin. Gazprom exemplified both of these periods. Now it finally has put development of its base oil and lubricants operations on the com-pany’s priority list. It is not without a reason that Kiselev told a reporter during a flight from Moscow to Omsk, “We aspire to become a number one lubri-cants company.”

Many observers are watching to see if a giant state-controlled company can pull it off. o

company operates a plastic bottle plant there and a big logistic center for finished lubes distribution in the European part of Russia,” Kiselev revealed. This facility was included in the acquisition of Rusoil in 2007, according to Kommersant. After the filling line was installed in Konstantinovsky, man-agement decided it would be more helpful to use this logistic center as a hub to market its lubricants in the European part of Russia.

BoLStering BaSe oiLSOmsk Plant Manager Chembulaev said the com-pany has already begun a project to upgrade its base oil plant. The past couple years the plant hit production targets, keeping pace with the increased demand in the country. “Base oil plant output vol-ume in 2009 was 230,000 tons,” he confirmed. The plant was on target for the same result in 2010.

A technical working committee is busy working on several installations, according to the plant’s technical director. “We are installing an improved deasphaltization unit, a couple units for selective refinement and three units for dewaxing,” Vasily Pozygun said, adding that this is to boost the vol-ume and quality of API Group I base oil currently produced at the plant.

“We have also completely replaced and computer-ized the control system of both the base oil and ex-isting blending plant resulting in better compound-ing and management of the finished lubricants,” he said. “Of course, with the increase of our base oil

A packaging line at Gazprom’s blending plant in Bari, Italy. Photo courtesy of Gazprom


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BRACING FOR THE COLDTHE COLDIndustry Strives to Avoid Oil Gelation

By Tim SullivanFresh oil

performance is no

guarantee of

performance in

the aged oils.”

Danesh Goberdhan Infi neum

During the winter of 2008-2009, engines failed in a number

of cars and trucks in Europe, appar-ently because cold temperatures caused their engine oils to solidify. It’s not clear precisely when or where these failures occurred, or the number of vehicles involved. What is obvious is that the automobile and lubricant industries took the incidents as a wake-up call to address a potentially growing problem.

Those studying the issue say it now appears that cold-temperature perfor-mance of engine oils may deteriorate more quickly than previously realized, and that factors such as oil dilution and soot levels may contribute to the process.

Efforts have coalesced to develop a meth-od to assess cold-temperature perfor-mance after an oil has been in use. Those working on the project say the industry should have its test by next winter.

Automakers have been reluctant to provide specific details about the engine failures from two years ago. Observers say original equipment manufacturers generally avoid disclosing such infor-mation, either out of fear that it could tarnish their reputations or that it could compromise their handling of warranty claims.

Lubes’n’Greases gathered some infor-mation from sources involved in inter-industry discussions of the problem and through documents from several companies that last year were tem-porarily posted on the website of the Coordinating European Council for the Development of Performance Tests for Fuels, Lubricants and Other Fluids, better known as CEC. Sources said at least three automakers reported engine failures in passenger cars and heavy-duty on-road trucks. Those engines appeared

to have been damaged, they said, after their lubricants underwent gelation, a phenomenon in which lubricants exposed to extremely cold temperatures take on a gel structure that prevents them from circulating.

One of the presentations posted on the CEC website, by Infineum, relayed infor-mation provided by one of the automak-ers. An unspecified number of that au-tomaker’s engines failed after overnight temperatures – it was unclear whether these failures occurred on one or more calendar days – reached between minus 20 and minus 25 degrees C. The vehicles started afterward but ran for only one to three minutes before main and connect-ing rod bearings were destroyed because of insufficient lubrication. Upon inspec-tion, their engine oils were found to be “firm enough to cut,” Infineum stated.

The industry has witnessed other spates of engine oil gelation on a few rare occasions over the decades. As a result, engine oil specifications include cold-temperature pumpability tests. Performed on mini-rotary viscometers, these procedures lower oil temperatures at controlled rates to set levels – usually between minus 10 and minus 40 degrees C. The MRV then turns a calibrated rotor through the oil and measures its viscosity and checks for yield stress.

But there is growing consensus now that existing test methods have an important shortcoming. Specifications call for them to be run on fresh samples of candidate oils, and so they only speak to the cold-temperature performance of the oils when fresh. Those studying the engine failures of 2008-2009 say that lu-bricants can lose their cold-temperature performance as they age in the crank-case. Moreover, they worry that industry trends may be accelerating the speed with which that happens. Probably the most concerning trend is the growing use of biodiesels and their dilution of engine oils. In an effort to reduce dependence on fossil fuels and to support renewable products, European governments have

mandated that diesel contain minimum amounts of fuels made from plants – usually seed oils.

At the same time, original equipment manufacturers have employed fuel spray patterns and piston wall impingement methods that inadvertently allow uncom-busted fuel to get past piston rings and be scraped into the oil sump. This migration includes both conventional and biodiesel, but the former is volatile enough that it evaporates. Biodiesel is less volatile, so it remains in the sump and builds up over time.

Technical experts have concluded that dilution by biodiesel can compromise an engine oil’s ability to avoid gelling at cold temperatures. They believe the same can result from accumulation of soot, a trend resulting from adoption of emis-sion control technologies such as exhaust gas recirculation. Other detriments are oxidation and nitration, effects of engine oil aging.

It is probably no surprise that changes to the chemical nature of engine oils can affect their cold-temperature per-formance. But industry players have expressed some alarm at how quickly this can happen.

“Analysis of the failing oils shows that, while obviously used, they were not ex-cessively degraded, with only mild oxida-tion, nitration and low [acid levels], low levels of soot and limited fuel dilution,” Brussels-based CEC said in another of


BRACING FOR THE COLDIndustry Strives to Avoid Oil Gelation

By Tim SullivanFresh oil

performance is no

guarantee of

performance in

the aged oils.”

Danesh Goberdhan Infi neum

“Fresh oil “Fresh oil

During the winter of 2008-2009, engines failed in a number

of cars and trucks in Europe, appar-ently because cold temperatures caused their engine oils to solidify. It’s not clear precisely when or where these failures occurred, or the number of vehicles involved. What is obvious is that the automobile and lubricant industries took the incidents as a wake-up call to address a potentially growing problem.

Those studying the issue say it now appears that cold-temperature perfor-mance of engine oils may deteriorate more quickly than previously realized, and that factors such as oil dilution and soot levels may contribute to the process.

Efforts have coalesced to develop a meth-od to assess cold-temperature perfor-mance after an oil has been in use. Those working on the project say the industry should have its test by next winter.

Automakers have been reluctant to provide specific details about the engine failures from two years ago. Observers say original equipment manufacturers generally avoid disclosing such infor-mation, either out of fear that it could tarnish their reputations or that it could compromise their handling of warranty claims.

Lubes’n’Greases gathered some infor-mation from sources involved in inter-industry discussions of the problem and through documents from several companies that last year were tem-porarily posted on the website of the Coordinating European Council for the Development of Performance Tests for Fuels, Lubricants and Other Fluids, better known as CEC. Sources said at least three automakers reported engine failures in passenger cars and heavy-duty on-road trucks. Those engines appeared

to have been damaged, they said, after their lubricants underwent gelation, a phenomenon in which lubricants exposed to extremely cold temperatures take on a gel structure that prevents them from circulating.

One of the presentations posted on the CEC website, by Infineum, relayed infor-mation provided by one of the automak-ers. An unspecified number of that au-tomaker’s engines failed after overnight temperatures – it was unclear whether these failures occurred on one or more calendar days – reached between minus 20 and minus 25 degrees C. The vehicles started afterward but ran for only one to three minutes before main and connect-ing rod bearings were destroyed because of insufficient lubrication. Upon inspec-tion, their engine oils were found to be “firm enough to cut,” Infineum stated.

The industry has witnessed other spates of engine oil gelation on a few rare occasions over the decades. As a result, engine oil specifications include cold-temperature pumpability tests. Performed on mini-rotary viscometers, these procedures lower oil temperatures at controlled rates to set levels – usually between minus 10 and minus 40 degrees C. The MRV then turns a calibrated rotor through the oil and measures its viscosity and checks for yield stress.

But there is growing consensus now that existing test methods have an important shortcoming. Specifications call for them to be run on fresh samples of candidate oils, and so they only speak to the cold-temperature performance of the oils when fresh. Those studying the engine failures of 2008-2009 say that lu-bricants can lose their cold-temperature performance as they age in the crank-case. Moreover, they worry that industry trends may be accelerating the speed with which that happens. Probably the most concerning trend is the growing use of biodiesels and their dilution of engine oils. In an effort to reduce dependence on fossil fuels and to support renewable products, European governments have

mandated that diesel contain minimum amounts of fuels made from plants – usually seed oils.

At the same time, original equipment manufacturers have employed fuel spray patterns and piston wall impingement methods that inadvertently allow uncom-busted fuel to get past piston rings and be scraped into the oil sump. This migration includes both conventional and biodiesel, but the former is volatile enough that it evaporates. Biodiesel is less volatile, so it remains in the sump and builds up over time.

Technical experts have concluded that dilution by biodiesel can compromise an engine oil’s ability to avoid gelling at cold temperatures. They believe the same can result from accumulation of soot, a trend resulting from adoption of emis-sion control technologies such as exhaust gas recirculation. Other detriments are oxidation and nitration, effects of engine oil aging.

It is probably no surprise that changes to the chemical nature of engine oils can affect their cold-temperature per-formance. But industry players have expressed some alarm at how quickly this can happen.

“Analysis of the failing oils shows that, while obviously used, they were not ex-cessively degraded, with only mild oxida-tion, nitration and low [acid levels], low levels of soot and limited fuel dilution,” Brussels-based CEC said in another of


the documents on its website. Yet most oils that meet specifications do not gel, the organization noted, suggesting that formulation is also an important factor.

Infineum, an additive supplier head-quartered in Abingdon, U.K., said it conducted extensive tests on cold-tem-perature pumpability of aged oils and that its findings bolstered those observa-tions. In field trials on passenger cars and heavy-duty trucks, some oils held their cold-temperature pumpability while performance of others deteriorated in less than 20,000 kilometers. In the truck trials, some oils that passed pumpability tests when fresh failed within 16,000 km.

“Fresh oil performance is no guar-antee of performance in the aged oils,” concluded Infineum Crankcase Special-ist Danesh Golberdhan, author of the company’s presentation. “Oils with mi-nor formulation changes can give either excellent or very poor low-temperature pumpability performance very early in the mileage accumulation.”

In light of these findings, many in the industry agree that it needs new tests to measure the cold-temperature pump-ability of oils after they’ve entered the crankcase.

“There is currently no test in Europe assessing the low-temperature pump-ability of aged oil in the presence of fuel dilution,” said Emmanuelle Faure-Birchem, Chevron Oronite’s product line manager for automotive engine oils in Europe, Africa and the Middle East.

“Development of this test will help close this gap and thus prevent potential field issues.”

“For the oil companies and OEMs it is really a significant concern,” said Laurent Tiquet, chairman of the Engine Lubricants Technical Committee for the French Coordination Association for the Development of Performance Tests for Transportation Fuels, Lubricants and Other Fluids. GFC is CEC’s counterpart in France. “It is the biggest priority at the moment. OEMs that had to deal with claims for failed engines are motivated by that. Other companies are concerned that numbers of failures could rise.”

Several companies and organizations have undertaken to develop test proce-dures to address the problem. Daimler developed its own procedure, of which Oronite and Infineum developed modi-fied versions. GFC developed a proce-dure contributed by member Peugot and was on the verge of adopting it when work was halted in October. Infineum also did some work to modify the GFC method.

Now all of those efforts have been sub-sumed into a test development exercise by CEC. The organization announced the

formation of a test development group last fall after the need for a procedure was endorsed by ACEA (the European Automobile Manufacturers’ Associa-tion), ATIEL (the Technical Association of the European Lubricants Industry) and ATC (the Technical Committee of Petroleum Additive Manufacturers in Europe). CEC selected Salbergen, Germany-based ISP to be the lead labo-ratory for the initiative and selected 10 oil and additive companies to be on the test development group. Its first meeting was scheduled for mid-December, and the CEC said it hoped to complete the work during the second quarter of 2011.

Automakers and oil companies are determined that the new procedure will be a bench test rather than an engine test, which would cost far more in terms of both time and money. Judging from the work done to date, the new proce-dure will probably use a mini-rotary viscometer, but the key will be to devise a method to simulate the aging process.

The methods proposed so far have tried to accomplish this by subjecting oil samples to heat and blown air for vary-ing periods of time ranging up to several

A cold-temperature pumpability test for aged oil would be performed using a mini-rotary viscometer. Photo courtesy of Tannas Co.


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moment.”

Laurent Tiquet, GFCreferring to test development program

“It is the biggest “It is the biggest


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days. Daimler and GFC both believed their procedures adequate, at least at some point. But Infineum and Oronite contended that both those procedures were too severe, that they would cause too much simulated aging. Critics say the method should identify oils that become gelation threats much earlier on.

“It is known that the procedures used in the current GFC and Daimler tests are too severe,” CEC said. “They produce oils that are much more heavily degraded (especially for oxidation) than oils which have failed in the field, and they do not give results that are in line with known or expected field performance.”

The methods discussed so far have taken the same general approach. For example, Oronite’s called for a 250 gram sample of oil diluted by 10 percent with B7 biofuel. The sample would be aged at 160 degrees C for 48 hours in Daimler

glassware. Temperatures for viscometer readings would range from minus 20 to minus 30 degrees C depending on the viscosity of the oil. Oronite said its pro-cedure “has good correlation with field performance.”

Infineum said it improved the Daim-ler procedure by shortening the aging simulation to 72 hours, and by using a different type of biodiesel.

CEC emphasized the importance of developing a test that can be shown to discriminate between oils that when aged and diluted with biofuel are likely to gel at cold temperatures and those that are not. In an apparent nod to the difficulty of this task, the organization posed the possibility that it will not succeed.

“In the event that no discrimination between the calibration oils is achieved, all work should be put on hold pend-ing a full review by [CEC’s] Managing Board to decide whether to terminate the project.”

If the test development group does find a procedure that can discriminate, the question will be how much of an impact will this have on the oil market. How many oils that meet current specifi-cations will fail the new test? Those that do would presumably require reformu-lation if companies want to continue marketing them in the same way.

ATIEL predicted that the impact will not be very large.

“Based on the limited data presented by ACEA, the issue appears to be iso-lated,” the association’s Industry Liason Group stated in response to questions. “Nevertheless we support continuous improvement of industry engine oil specifications.”

Oronite’s Faure-Birchem maintained that it is too early to know.

“Until the test method and specifica-tions are agreed upon, it is impossible to judge the impact of any specific oils.”

European automakers will be crossing their fingers for two reasons this winter. First they’ll wish to avoid a repeat of 2008-2009 while they still lack an ac-cepted test for cold-temperature pump-ability of aged oils. Second, they’ll hope that the CEC’s new test will protect them from such problems in the future. o

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International economic sanctions against Iran have had a very per-sonal impact on Atul Satsangi. In 2007, the Indian national became

head of international sales for UniSep Oil, a new lubricants business located in Sharjah, United Arab Emirates. A joint venture between U.A.E. blender Univer-sal Oil and Iranian base oil refiner Sepa-han Oil, UniSep was created to import Sepahan base oils, some to be blended by UniSep, the rest to be sold abroad.

But the joint venture has been put on hold indefinitely, at least in part because sanctions made it difficult for the opera-tion to conduct its business. Satsangi, who went back to marketing base oils in India from other sources, said there were also “other reasons,” but he left no doubt about the impact sanctions are having.

“Implementation of Iran sanctions has become very strict lately,” he said in an interview with Lubes’n’Greases. “Monitor-ing in the U.A.E. of Iran-bound trade and enforcing the sanctions is showing its effects. Trade is virtually being done on a cash-and-carry basis.”

The sanctions stem from objections to nuclear activities conducted by the Iranian government. The United States and some other countries claim Iran is refining fuel and taking other steps to develop the capability to make nuclear weapons. Tehran insists the program has only peaceful purposes.

by Mark Townsend

IRAN’SISOLATION

Sanctions against Iran are divided between those imposed by the United Nations and additional unilateral mea-sures adopted by the United States and the European Union. Australia, Japan, South Korea and Canada have also implemented restrictions to varying de-grees. The UN ratcheted up restrictions in June when its Security Council passed Resolution 1929. The U.S. and the EU strengthened their own penalties later during the summer.

Historically sanctions have focused on preventing sales to Iran of items and technology that could be used for military purposes. Newer curbs have extended to interaction with Iranian banks and individuals with links to Iran’s Revolutionary Guard.

The lubricants business could receive a further setback if U.S. President Barack Obama approves a set of sanctions specifically targeted at Iran’s refining capability. Dubbed the Comprehen-sive Iran Sanctions Accountability and Divestment Act, the legislation would punish companies and individuals who aid Iran’s petroleum sector. With a crude oil refining capacity of 1.68 million bar-rels per day, that is a development that worries many. Turkey and China have both been accused of supplying refined petroleum products to the country.

But the sanctions are already affect-ing Iran’s lubes industry in several ways.

They have disrupted access to raw materials such as lubricant additives and higher quality base oils, and they have also impeded Iranian refiners from up-grading their own base oil supply. They have compelled a number of internation-al companies operating in Iran to curtail operations there. In addition, Iranian companies trying to export base oils have found it more difficult to do so.

One of the issues confronting the domestic industry is procurement of higher quality lubricants or the base stocks needed to produce them. Iran has surplus base stock capacity – a bit more than half of the capacity in all of the Middle East – but almost all of it is API Group I. As a result, Iranian lube suppliers have had to import Group II and III base stocks that are increasingly needed to blend higher quality lubri-cants – or else they have had to import the finished lubes. Either prospect is becoming more difficult, according to Fouman Chemie, a lube marketer based in Tehran.

“Sanctions are hurting,” said an of-ficial who asked not to be identified. “Financing and opening letters of cred-its, especially in euro and dollar denomi-nations, are a problem. Whereas before we could open letters of credit and pay our banks 10 percent up front and the remainder at customs clearance, we are now having to battle with suppliers not

“Monitoring in the U.A.E. of Iran-bound

trade is showing its effects. Trade is

virtually being done on a cash-and-carry basis.”

– Atul Satsangi formerly of UniSep

Sanctions disrupt lubes industry


International economic sanctions against Iran have had a very per-sonal impact on Atul Satsangi. In 2007, the Indian national became

head of international sales for UniSep Oil, a new lubricants business located in Sharjah, United Arab Emirates. A joint venture between U.A.E. blender Univer-sal Oil and Iranian base oil refiner Sepa-han Oil, UniSep was created to import Sepahan base oils, some to be blended by UniSep, the rest to be sold abroad.

But the joint venture has been put on hold indefinitely, at least in part because sanctions made it difficult for the opera-tion to conduct its business. Satsangi, who went back to marketing base oils in India from other sources, said there were also “other reasons,” but he left no doubt about the impact sanctions are having.

“Implementation of Iran sanctions has become very strict lately,” he said in an interview with Lubes’n’Greases. “Monitor-ing in the U.A.E. of Iran-bound trade and enforcing the sanctions is showing its effects. Trade is virtually being done on a cash-and-carry basis.”

The sanctions stem from objections to nuclear activities conducted by the Iranian government. The United States and some other countries claim Iran is refining fuel and taking other steps to develop the capability to make nuclear weapons. Tehran insists the program has only peaceful purposes.

by Mark Townsend

IRAN’SISOLATION

Sanctions against Iran are divided between those imposed by the United Nations and additional unilateral mea-sures adopted by the United States and the European Union. Australia, Japan, South Korea and Canada have also implemented restrictions to varying de-grees. The UN ratcheted up restrictions in June when its Security Council passed Resolution 1929. The U.S. and the EU strengthened their own penalties later during the summer.

Historically sanctions have focused on preventing sales to Iran of items and technology that could be used for military purposes. Newer curbs have extended to interaction with Iranian banks and individuals with links to Iran’s Revolutionary Guard.

The lubricants business could receive a further setback if U.S. President Barack Obama approves a set of sanctions specifically targeted at Iran’s refining capability. Dubbed the Comprehen-sive Iran Sanctions Accountability and Divestment Act, the legislation would punish companies and individuals who aid Iran’s petroleum sector. With a crude oil refining capacity of 1.68 million bar-rels per day, that is a development that worries many. Turkey and China have both been accused of supplying refined petroleum products to the country.

But the sanctions are already affect-ing Iran’s lubes industry in several ways.

They have disrupted access to raw materials such as lubricant additives and higher quality base oils, and they have also impeded Iranian refiners from up-grading their own base oil supply. They have compelled a number of internation-al companies operating in Iran to curtail operations there. In addition, Iranian companies trying to export base oils have found it more difficult to do so.

One of the issues confronting the domestic industry is procurement of higher quality lubricants or the base stocks needed to produce them. Iran has surplus base stock capacity – a bit more than half of the capacity in all of the Middle East – but almost all of it is API Group I. As a result, Iranian lube suppliers have had to import Group II and III base stocks that are increasingly needed to blend higher quality lubri-cants – or else they have had to import the finished lubes. Either prospect is becoming more difficult, according to Fouman Chemie, a lube marketer based in Tehran.

“Sanctions are hurting,” said an of-ficial who asked not to be identified. “Financing and opening letters of cred-its, especially in euro and dollar denomi-nations, are a problem. Whereas before we could open letters of credit and pay our banks 10 percent up front and the remainder at customs clearance, we are now having to battle with suppliers not

“Monitoring in the U.A.E. of Iran-bound

trade is showing its effects. Trade is

virtually being done on a cash-and-carry basis.”

– Atul Satsangi formerly of UniSep

Sanctions disrupt lubes industry


willing to sell products to Iran altogether, [and] paying 50 to 100 percent up front.”

Madjid Safdari, of Behran Oil’s Inter-national Sales Department, estimated that the Iranian market requires 54,000 metric tons per year of imported base stocks that are Group II or higher – or a corresponding amount of lubricants made from them – and he said that Behran, a Tehran-based base oil and lubricant supplier, is responsible for 81 percent of that traffic. Behran’s joint venture with Total Outre-Mer supplies imported finished products that include top tier engine oils and industrial lubri-cants, described by French energy giant Total as “small quantities.”

If sanctions continue unabated, Safdari said, existing base oil plants will likely need to convert some refining capacity to accommodate the market’s shift towards Group II and III, projected by Behran to reach 150,000 t/y by 2015. “Group I products cannot continue to dominate the market, but technical know-how will be a problem in the cur-rent situation.”

In fact, two Iranian Group II and III projects were announced in 2007 and 2008 but have also been delayed by sanc-tions. Behran approved construction of a 220,000 t/y plant adjacent to the existing Tabriz Oil Refinery at Tabriz City but has so far failed to obtain the technology for such a facility. Most of the world’s Group II and III plants use technol-ogy supplied by Chevron Lummus or ExxonMobil, and U.S. sanctions prohibit those companies from dealing with Iran. Safdari said Behran is negotiating license agreements with an another unnamed supplier.

The other project is a joint venture between Fouman Chemie and Sepahan. They plan to build a 300,000 t/y plant at Bandar Abbas and in 2008 announced an agreement to license catalytic hydro-refining technology from the French firm Axens. But the project is at a stand-still because the partner cannot secure financing.

“Before banks were offering 85 percent project financing,” the official at Fouman Chemie said. “[That] is now reduced to 50 percent, [and] on a $500 million investment that is a huge challenge.”

Another Iranian base oil producer, Iranol, also wants to form a Group II/III joint venture, according to Planning Manager Mohammad Roshangar, who said, “We must do it.” He did not discuss potential technical partners.

Though some put on a brave face, Ira-nian blenders also face acute shortages of bright stock, which is produced domes-

tically only in small volumes. Perhaps a little optimistically, Behran’s Safdari said Chinese technology may fill the void. “Chinese quality is developing,” he added.

Several sources talked of disruptions to supplies of lubricant additives.

“Infineum decided to stop supplies to Iran,” Safdari said, referring to the U.K.-based ExxonMobil and Shell joint venture. “Large amounts of sub-grade Chinese and locally made additives are being used, and these do not meet inter-national specifications and are damaging local engines and machinery.”

Iran has not been completely shut off from Western additives. For example, Winnington FZCO is a chemical trad-ing company set up several years ago in Dubai Airport Free Zone, and accord-ing to its website, it supplies a variety of chemicals to a range of industries. Winnington declined to discuss its opera-tions, but an individual at Afton Chemi-cal’s office in Dubai, who asked not to be identified, said Winnington acquires lube additives manufactured at Afton’s plant in Belgium and distributes them in Iran. Afton is headquartered in Richmond, Virginia, U.S.

Sanctions are also impacting inter-national participants in Iran’s lubricant market. In the face of intense political pressure, industry observers say that Shell’s activity in Iran has been declining for some time. This is despite the fact that as recently as 2009, Shell acknowledged

Behran Oil’s base oil plant in Tehran. Iran’s base oil capacity is almost entirely API Group I, making the country dependent on imports for higher quality base stocks and lubricants. Photo Courtesy of Behran Oil

Behran Oil’s base oil plant in Tehran. Iran’s base oil capacity is almost entirely API Group I, making the country dependent on imports for higher quality base stocks and lubricants. Photo Courtesy of Behran Oil

“Large amounts of sub-grade Chinese

and locally made additives are being

used, and these…are damaging local engines

and machinery.”– Madjid Safdari

Behran Oil



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the size and global importance of Iran’s hydrocarbon reserves. A spokesperson for Shell said it is complying with U.S. and EU sanctions.

However, rules about the timing of full compliance appear to be providing the Anglo-Dutch oil giant with room to maneuver. A Shell source who asked not to be identified said current operations in Iran are being drastically reduced. By the end of 2010 Shell staff numbers were scheduled to be in “single figures” and the operation effectively a representative office. A Shell joint venture with Iranian base oil and lube producer Pars Oil ap-pears to be the main casualty.

Germany’s Fuchs Petrolub AG has a United Arab Emirates-based joint venture, Fuchs Oil Middle East (the partner is Alhamrani, of Saudi Arabia), which has a subsidiary trading company in Iran. Fuchs declined to discuss the status of the trading company. Other big lubricant suppliers with operations in Iran include Castrol, Total and Agip.

Iranian base oil refiners frequently use joint ventures or foreign subsidiaries to export their products, but such activi-ties have faced increasing obstacles as sanctions tighten. In addition to UniSep, Sepahan formed a base oil sales subsid-iary in U.A.E., International Solar Oil Co., located in the Dubai Airport Free Zone. According to a spokesperson for Sepahan in Tehran, that operation was

mothballed because of the embargo on trade.

Authorities are clamping down on attempts to circumvent the embargo, and Dubai in particular is under mounting pressure to comply. Nevertheless, Irani-ans insist that the crackdown on exports has neither hurt nor discouraged them. Reza Javanshir of Sepahan’s export department insists the setback for Solar Oil will only be temporary. “Yes we have had some problems, but we are confident in our ability to overcome the issues.”

“We have felt nothing, and there has been no effect on our base oil exports,” Safdari said of Behran. He stated that ex-port sales figures for 2010 were expected to exceed 2009 levels and would be in excess of U.S. $30 million (€22 million). He also contended that Behran still has access to captive regional markets such as the Middle East, members of the Commonwealth of Independent States and Turkey, the majority of which are not fully complying with sanctions.

Iranol’s Roshangar agreed and predict-ed sanctions will not last much longer.

“Selling to Europe is not a problem, and we predict that EU sanctions will be lifted very soon, and we are working on that basis.” The suggestion that sanctions may be lifted by Europe will surprise many and possibly indicates a desire to cast doubt on the cohesiveness of current policy or simply wishful thinking.

Satsangi, the former international sales chief at UniSep, said business will continue, hinting that industry will inevitably explore ways to skirt obstacles. “We are looking at alternate routes – which cannot be disclosed for obvious reasons – to conduct our trade,” he said. “Trade will go on, come what may. It’s virtually impossible to put a complete stop to it.”

Indeed, although the loopholes are closing, U.A.E. regulators remain con-cerned about the status of satellite com-panies frequently structured as free zone entities and their ability to repackage or rebrand. Turkey and Malaysia look set to gain from the relocation of some of these businesses as they try to escape the grip of current policy.

Consensus about the full impact of the recent escalation in sanctions is var-ied but there can be no doubt they have significantly curtailed trade in critical sectors. The effects are not unique to any industry, but the concert of measures has ripped through Iran’s economy. Strategic sectors including the lubricants sector remain the key focus, and Iran’s ability to sustain further contraction of vital commercial interests is doubtful. There is something of a ‘who blinks first’ psychol-ogy that will shape the final outcome, and with the prospect of further sanc-tions on the horizon, those odds do not look to be in Iran’s favor. o

Trade sanctions against Iran have also affected Dubai, which has been a large layover site for goods sent into and out of Iran.

“Selling to Europe is not a problem,

and we predict that EU sanctions will be

lifted very soon”– Mohammad Roshangar

Iranol


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AirtimeMore

Can Lubes Lift Profi ts? by Lisa Tocci


If you want to buy six new Airbus A330-200 wide-body passenger

jets, as Hawaiian Airlines did in Novem-ber, you’ll pay over U.S. $190 million apiece for them. Lufthansa’s recent order for a mix of 40 Airbuses amounted to $4.3 billion. Over at Boeing, a single 777 Freighter costs well over a quarter of a billion dollars.

Welcome to the high-stakes world of aviation, where the pressure on aircraft builders is no less breathtaking than the prices. Whether flying in commercial passenger service, air cargo or military missions, aircraft are getting bigger, more powerful, more fuel efficient and more reliable. And the last of these, reliability, is no mere afterthought, says Steve Lee

of QinetiQ. “As the airline industry says, a non-flying aircraft is one that is not making revenue.”

Thanks to increased demand for air travel and the need to replace older, inef-ficient equipment, aircraft buying is ex-pected to surge for the next two decades. Boeing predicts the world’s airlines will need to buy more than 30,900 new jets by 2029, valued at $3.6 trillion. Over 7,000 of these, valued at $800 billion, will be bought by European airlines, it says, with over 95 percent of the Euro-pean fleet turning over.

Airbus likewise sees demand taking off, but believes that concerns about air-port congestion will lead airlines to put their money on bigger aircraft, thereby reducing seat-mile costs and assuring profit margins. It sees roughly 25,000 new jets seating over 100 being put into service by 2028, including of course hun-dreds of its own 525-passenger A380s . The top buyers will be Asia-Pacific-based airlines with 31 percent of the new buys, followed by airlines from Europe with 25 percent – particularly the United King-dom with its mix of global, low-cost and charter airlines. North American airlines will snap up another 23 percent, Airbus forecasts.

While they may debate the most desir-able scale for passenger jets, both aircraft builders agree that cost, efficiency, reve-nue and environmental issues are driving the development of all their equipment

and components. And that includes lubricants, said Lee, principal scientist for fuels and lubricants at QinetiQ in Farnborough, U.K. QinetiQ, once part of the U.K. Ministry of Defence and now privatized, helps clients by evaluat-ing materials and doing research, writing specifications and performing tests. Lee, who specializes in aviation lubes includ-ing gas turbine lubricants, spoke in late September to the ACI European Base Oils & Lubricants Forum in London. His paper, co-authored by Alun Williams of Airbus, offered an aviation industry perspective on the future of lubrication.

“What does the aviation industry want? In a nutshell, they want reduced cost, increased revenue and increased efficiency,” Lee explained. “Also, an air-craft is a mass of vibration, and anything that a lubricant can do to help that is go-ing to be seized on by aircraft operators.”

The aviation industry is looking for re-duced aircraft effect on the environment and, conversely, reduced environmental effects on the aircraft, he added. A good example was the cloud of volcanic ash which threatened air travel in Europe in April, and posed a major hazard for equipment. But more quotidian issues are harsh weather, dust, corrosive envi-ronments and temperature extremes.

Aircraft builders also want to be able to offer increased range, with greater ability to manage weight, power and fuel. Fuel costs are always important,

AirtimeMore

Can Lubes Lift Profi ts? by Lisa Tocci


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Lee said, but the stability of fuel costs has also become essential to the airline industry’s health, as proved by the crush-ing crude price hikes of 2008. “Twenty-five airlines were bankrupted in 2008,” he pointed out.

Higher power density is another critical demand. “Operators want to get more power per kilogram of weight, so they can get more range for the same amount of fuel.” Meanwhile, stabiliz-ers and undercarriages keep increasing

in size and weight, as do other onboard equipment. To offset these gains, the use of nonconventional, lighter weight materials, such as composites, carbon fibres and plastics, is expected to rise – but such moves always carry a risk of chemical incompatibilities, Lee said. “In Singapore, one aircraft was fumigated, and the plane fell apart” when some new materials unexpectedly dissolved. Similar issues with materials compatibility are likely to confront lubricants, he hinted.

When it comes to lubricants, airlines and builders alike “want any oil to be proved before it reaches their aircraft,” which can take years to accomplish, Lee stressed. “They also want extra [per-formance] to be built into the fluids, so they can tap into it when they’re ready to extend drain intervals.”

Another issue is the complexity and volume of lubricants that are required for each aircraft. There are a huge number of lube points, ports and parts that re-quire attention, making lube inventories expensive to stock efficiently worldwide, as airlines must do. SAE International’s E-34 Aviation Propulsion Lubricants Committee works on defining aviation lube performance, while the SAE AMS M Grease Committee has worked to streamline the selection of greases used in aviation components.

Other issues and challenges also in-clude electricity supply for aircraft. “The Boeing 787’s air conditioning supply, for example, is not bleed air from the en-gines (as it was traditionally), but instead uses electric motors.” The motor may not need lubrication, but what about the rest of the system, Lee mused.

“Planes operating in the high outer atmosphere have their own set of issues,” he continued. “There may be problems with radiation, and the thin-air environ-ment. Temperature and load ranges are much wider than in the lower atmo-sphere, too. Some lubrication systems appear to be in very vulnerable locations for outer atmosphere exposure.”

The military, where QinetiQ got its start, has its own concerns. Military jets weigh less and tend to be more unstable than passenger jets, because they sacri-fice stability for speed and maneuverabil-ity. They also demand more work from the engines, putting greater stresses on



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the lubricants. They must respond better to controls – meaning a higher-perform-ing hydraulic system with exceptional fluid – and undergo more stress and fatigue.

Lee pointed out that the U.S. Air Force is having good success with less-flam-mable polyalphaolefin hydraulic fluids. That’s counter-intuitive, because PAO fluids indeed are flammable; however, they’re less likely to ignite under combat conditions, such as if a hot bullet pierces a hydraulic line. Commercial aircraft usually don’t face the same fire-safety risks. “However, USAF statistics show a marked decrease in financial losses due to fire, so apparently it’s working for them,” he commented.

In all cases, “no maintenance is the ultimate goal,” said Lee, but this is highly unlikely to occur. “Twenty-four months is the standard interval for en-gine maintenance, although some engine manufacturers are saying they can stay on-wing for 40,000 hours,” he said, then

wryly added, “But can they do it without seeing coke deposits?

“Fortunately, frequent top-ups are needed in aircraft engine oils, and that tends to replenish the additive part of the engine oil formulation,” he continued. “But less lubricant consumption is an-other goal of aircraft operators,” which will reduce the need for top-up and diminish this oil-freshening effect. That means more robust additive systems could be needed.

Elsewhere, many aircraft have service points that are all but inaccessible, Lee noted. In such cases, longer-lived lubri-cants will help; he said it also suggests an opportunity for solid lubes, or ones that self-regenerate or even self-replenish. That would require some ability to purify the lubricant over its service life, he conceded, although the added weight of another oil reservoir and the purification system could be a deal-breaker.

“For airlines, any maintenance breakdown is a cost,” Lee said, “and at

the end of the day, what operators want most is guaranteed availability and up-time. They would like to reduce the need for redundancy and back-up systems.”

QinetiQ has been assisting in these lube system needs by trying to discover how to improve oil life, through the use of computer modeling rather than impossibly costly field trials. Offering a preview of this research, Lee said the preliminary findings are that most engine oil life is used up in the most intense moments of flight: takeoff, early climb and reverse thrust (braking). Otherwise, the rest of the flight puts far less stress on the oil.

If this turns out to be true, and the oil is coasting along except for those ener-getic bursts of activity, “can we ignore the rest of the flight plan in respect of its contribution to total fluid degrada-tion?” he wondered. Someday, he of-fered, maybe it will be possible to use an algorithmic approach to alert operators of remaining oil life, similar to the oil life monitors on many passenger cars. Now that would definitely change the stakes in the world of aviation lubricants. o

To meet demand, Airbus boosted A320 production to 38 aircraft per month in August, and plans a further increase to 40 per month in the fi rst quarter of 2012.

The tail mounting of this Airbus A380 is a lightweight composite, as are other aircraft components today.


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the lubricants. They must respond better to controls – meaning a higher-perform-ing hydraulic system with exceptional fluid – and undergo more stress and fatigue.

Lee pointed out that the U.S. Air Force is having good success with less-flam-mable polyalphaolefin hydraulic fluids. That’s counter-intuitive, because PAO fluids indeed are flammable; however, they’re less likely to ignite under combat conditions, such as if a hot bullet pierces a hydraulic line. Commercial aircraft usually don’t face the same fire-safety risks. “However, USAF statistics show a marked decrease in financial losses due to fire, so apparently it’s working for them,” he commented.

In all cases, “no maintenance is the ultimate goal,” said Lee, but this is highly unlikely to occur. “Twenty-four months is the standard interval for en-gine maintenance, although some engine manufacturers are saying they can stay on-wing for 40,000 hours,” he said, then

wryly added, “But can they do it without seeing coke deposits?

“Fortunately, frequent top-ups are needed in aircraft engine oils, and that tends to replenish the additive part of the engine oil formulation,” he continued. “But less lubricant consumption is an-other goal of aircraft operators,” which will reduce the need for top-up and diminish this oil-freshening effect. That means more robust additive systems could be needed.

Elsewhere, many aircraft have service points that are all but inaccessible, Lee noted. In such cases, longer-lived lubri-cants will help; he said it also suggests an opportunity for solid lubes, or ones that self-regenerate or even self-replenish. That would require some ability to purify the lubricant over its service life, he conceded, although the added weight of another oil reservoir and the purification system could be a deal-breaker.

“For airlines, any maintenance breakdown is a cost,” Lee said, “and at

the end of the day, what operators want most is guaranteed availability and up-time. They would like to reduce the need for redundancy and back-up systems.”

QinetiQ has been assisting in these lube system needs by trying to discover how to improve oil life, through the use of computer modeling rather than impossibly costly field trials. Offering a preview of this research, Lee said the preliminary findings are that most engine oil life is used up in the most intense moments of flight: takeoff, early climb and reverse thrust (braking). Otherwise, the rest of the flight puts far less stress on the oil.

If this turns out to be true, and the oil is coasting along except for those ener-getic bursts of activity, “can we ignore the rest of the flight plan in respect of its contribution to total fluid degrada-tion?” he wondered. Someday, he of-fered, maybe it will be possible to use an algorithmic approach to alert operators of remaining oil life, similar to the oil life monitors on many passenger cars. Now that would definitely change the stakes in the world of aviation lubricants. o

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KIEV, Ukraine – Ukraine, once the undisputed powerhouse of Eastern Europe’s grease market, is eagerly eyeing industrial growth and foreign investment to reclaim that dominant role, while Russia’s struggling grease industry looks to leadership from the All-Russia Research Institute of Oil Refining.

g r e a s e s i n e a s t e r n e u r o p e

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Institute’s Annual General Meeting here last October.

Famous For greaseUkraine is famous worldwide for its grease research and its grease produc-tion, Oleg Makedonsky of Berdyansk, Ukraine-based Azmol told the confer-ence. Ukraine itself is a big market, and grease exports play an important role.

With a population of 46 million, to-tal land mass of nearly 604,000 cubic kilometers, and a developed industrial base, particularly in its eastern regions, Ukraine is well situated to support a growing economy and a growing grease industry. “Mining and metallurgy, trans-port and machine-building industries are the major grease consumers in Ukraine,” said Makedonsky, speaking through a translator.

Official state data provide no answer to questions about how much grease is pro-duced in Ukraine or how many compa-nies make it. “The only known fact is that one production company is state-owned” – Azmol – “and all the rest are private,” he said. It’s believed that about 50 percent of the grease market consists of “shad-ow” production, so “it is recommended to check on the status and reliability of a potential partner in Ukraine” before doing business.

Azmol estimates that grease demand in Ukraine was about 20,000 metric tons in 2008. Steelmaking and other met-allurgy is the biggest user, consuming 43 percent, followed by the automobile/transit industry with 18 percent and min-ing with 16 percent.

The greases produced in Ukraine are changing rapidly, Makedonsky contin-ued. Hydrated calcium grease no longer dominates, and lithium grease consump-tion is rising. “Ukraine step by step is ap-proaching the average European level,” he said, but “at the same time, complex lithium grease [demand] remains very low.” Production by base oil type has changed very little in recent years, with mineral base oils still accounting for 99.6 percent of the market. Silicone fluids,

polyalphaolefins and synthetic esters to-gether hold the remaining sliver.

Fully 65 percent of all greases are pack-aged in drums, most commonly 210 or 60 cubic decimeter sizes. Pails, cans, car-tridges and tubes meet the need for small-er packages.

In a typical steel plant, said Makedon-sky, calcium greases generally make up 70 percent of total grease consumption. Lithium and complex lithium greases

Grease Production in ukraine vs. europe

Grease Consumption in Ukraine

Note: Due to rounding, columns may not add. Source: Azmol

Source: Azmol

Total: 20,000 tons/year

type of thickener ukraine (2009) europe (2008)

Aluminum Soaps: Conventional <1% <1% Complex -- 5% Total Aluminum <1% 6%

Calcium Soaps: Hydrated 31% 6% Anhydrous -- 3% Complex 9% 6% Calcium sulfonate -- <1% Total Calcium 40% 15%

Lithium Soaps: Conventional 38% 56% Complex 1% 13% Total Lithium 39% 68%

Sodium Soap: 7% 1%

Other Metallic Soap: -- 3%

Urea Thickeners: -- 3%

Organophillic Clay/Silica Gel Thickeners: <1% 2%

Other Non-soap Thickeners: 14% 2%


Metallurgy

Auto/transport industry

Mining

Fuel & power engineering

Agriculture

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Q:I add Pour Point Depressants (PPD) to my Group III mineral oils and see

an improvement in pour points. Why don’t polyalphaolefins (PAOs) respond to PPDs?

A:Because PAOs have a diverse, highly branched isoparaffin structure, they provide

excellent low-temperature viscometrics and very low pour points (ppt) without adding PPDs. PPDs act only on linear or waxy compounds, and these characteristics are absent from PAOs. With Synfluid® PAO 4 cSt having a -73 °C ppt and -40 °C viscosity of 2,380 cSt, a PPD is not necessary.

The scanning brookfield chart below demonstrates the difference in viscometrics between a Synfluid® PAO and a pour point depressed mineral oil.

A Group III mineral oil with a 0.1% PPD achieves an improved pour point, but to the detri-ment of the low-temperature viscometrics. You would expect the viscosity to improve with a lower pour point, but the opposite is true. As a result, the jump in the viscosity adversely affects the ability to pump at low temperatures. Some specifications have a low-temperature MRV requirement. You see, “the jump hurts the pump.”

Adding a PPD will reduce the pour point of a mineral oil, but it still will not achieve the performance of a PAO. I would love to discuss your application with you and give you suggestions on which Synfluid® PAO can help you achieve your target. Give me a call.

www.synfluid.com [email protected]

©2010 Chevron Phillips Chemical Company LPSynfluid® is a registered trademark in the U.S. and other

jurisdictions owned by Chevron Phillips Chemical Company LP.

with Ken Hope, Ph.D.

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are generally less than 17 percent, with a range of other greases making up the dif-ference. Ukraine’s state railway monop-oly is another big market, where lithium greases typically hold a strong 31 percent, sodium and calcium greases account for about 26 percent each, and non-soap and other greases make up the remain-der. “Although we can see the predomi-nance of relatively cheap and old grease types” in railroad applications, he noted, “lithium grease’s share almost reaches one-third and is rising at the expense of sodium greases.”

Grease production in Ukraine “consid-erably exceeds domestic demand,” Make-donsky said. “An essential amount is ex-ported,” particularly to Commonwealth of Independent States member countries, Europe, Asia and Africa. Lithium greases make up a much larger share of exports than of domestic consumption. Grease imports amount to less than 1,500 tons per year.

With the end of the global economic crisis, “Ukraine possesses a good poten-tial for growth and structural changes,”

Makedonsky concluded. A highly quali-fied and low-cost workforce would wel-come more modern grease manufactur-ing. “With a new team in charge of our state, we expect Ukraine to become more attractive for investors, and hope that Ukrainian grease manufacturers will fit into these programs.”

russia Looks ahead – Far ahead

Azmol was Russia’s big grease supplier before the fall of the Soviet Union, Alex-ander Danilov, deputy director general of the Moscow-based All-Russia Research Institute of Oil Refining (VNIINP), told the ELGI meeting. “After the U.S.S.R. ceased to exist, grease production in Rus-sia encountered a number of difficulties.” Azmol had produced more than half of Russia’s supply, and possessed the most advanced grease technology. In addition, with industrial production in a tail-spin in the 1990s, grease demand plummeted.

As the economy recovered after the cri-sis of 1998, modern foreign technologies

Principle Russian Grease Producers

Source: VNIINP

Total: 40,000 - 45,000 tons / year

Sibneft Omsk Refinery

Moscow Petroleum Plant

Kuskovo Grease Plant (Kuzaks)

Perm Grease Plant

Rostov Petroleum Plant (Rikos)

PKF Rusma

Orenburg Petroleum Plant

Others

“Ukraine possesses a good potential for growth and

structural changes.”– Oleg Makedonsky, Azmol



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hydrated calcium greases and growth in lithium grease production. “Nevertheless, this can hardly be called a big achieve-ment, because the greases that form the basis of leading industrial countries’ re-cent assortment – complex lithium, com-plex aluminum, organic thickeners, and others – are not produced or are produced in small quantities,” said Danilov.

How can Russia improve its greases, he asked, when standards in Russia are not strict, so lower quality greases dominate? “We must improve our quality evalua-tions and standards, to harmonize with international standards and to minimize counterfeit production.”

VNIINP is conducting research on high-quality greases, particularly greases designed for special operating conditions, including wide temperature ranges and

were introduced, but “foreign equipment was accompanied with its own lubrica-tion charts. In this way, Russian greases were excluded from the market, although they were not always unacceptable.”

At the beginning of the 1990s, said Danilov, grease production in Russia was about 100,000 tons per year. “At the present time, it is only 45,000 to 50,000 tons per year, with no tendency to grow.”

The Perm grease and cutting oil plant is Russia’s largest today, followed by the Rostov (Rikos), Sibneft and Orenburg plants. In 2009, Danilov noted, Slavneft’s Yaroslavsky oil refinery ceased grease production.

In addition to the larger grease produc-ers, there are several dozen small plants in Russia, including Rosneft and Neft-eprodukt, that produce small volumes of

contact with aggressive media, Danilov said. “We are producing greases for aero-space, aircraft and medical applications, in small quantities, and some exceed the quality of foreign greases.”

But the production of such greases is only possible in certain plants, with the required technological and analytical equipment and highly qualified staff, he went on. They are usually produced on a pilot-plant basis or under the sur-veillance of the developers, under license contracts.

“Our biggest issue,” Danilov concluded, “is the technological equipment in facto-ries. Old equipment prevails, and Russia needs 10 or 20 years to upgrade its grease.

“The most complicated problem requir-ing solving is modernization of technology and our raw material base.” o

special purpose greases. And VNIINP, the Electrogorsk Institute and a few oth-er organizations conduct research and pilot-scale production. Unfortunately, there are also companies that claim to be grease producers but which resell others’ production, and in the worst case, said Danilov, “pirate production of expensive greases under VNIINP and other authori-tative companies’ brands. Generally these products are of low quality.”

In Russia today, grease is at a low level of development. “Our goal is to upgrade and replace imports,” Danilov contin-ued, saying he believes that the ratio of imports to domestic grease is about one-to-one now. “Imports are higher quality.”

Some positive changes have occurred in Russia’s grease production, he continued, including a reduction in production of

“The most

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requiring solving is

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Lithium

Calcium, solid oil and other

Complex soaps

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Grease Production in Russia

Source: VNIINP

Total : <50,000 tons/year


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hydrated calcium greases and growth in lithium grease production. “Nevertheless, this can hardly be called a big achieve-ment, because the greases that form the basis of leading industrial countries’ re-cent assortment – complex lithium, com-plex aluminum, organic thickeners, and others – are not produced or are produced in small quantities,” said Danilov.

How can Russia improve its greases, he asked, when standards in Russia are not strict, so lower quality greases dominate? “We must improve our quality evalua-tions and standards, to harmonize with international standards and to minimize counterfeit production.”

VNIINP is conducting research on high-quality greases, particularly greases designed for special operating conditions, including wide temperature ranges and

were introduced, but “foreign equipment was accompanied with its own lubrica-tion charts. In this way, Russian greases were excluded from the market, although they were not always unacceptable.”

At the beginning of the 1990s, said Danilov, grease production in Russia was about 100,000 tons per year. “At the present time, it is only 45,000 to 50,000 tons per year, with no tendency to grow.”

The Perm grease and cutting oil plant is Russia’s largest today, followed by the Rostov (Rikos), Sibneft and Orenburg plants. In 2009, Danilov noted, Slavneft’s Yaroslavsky oil refinery ceased grease production.

In addition to the larger grease produc-ers, there are several dozen small plants in Russia, including Rosneft and Neft-eprodukt, that produce small volumes of

contact with aggressive media, Danilov said. “We are producing greases for aero-space, aircraft and medical applications, in small quantities, and some exceed the quality of foreign greases.”

But the production of such greases is only possible in certain plants, with the required technological and analytical equipment and highly qualified staff, he went on. They are usually produced on a pilot-plant basis or under the sur-veillance of the developers, under license contracts.

“Our biggest issue,” Danilov concluded, “is the technological equipment in facto-ries. Old equipment prevails, and Russia needs 10 or 20 years to upgrade its grease.

“The most complicated problem requir-ing solving is modernization of technology and our raw material base.” o

special purpose greases. And VNIINP, the Electrogorsk Institute and a few oth-er organizations conduct research and pilot-scale production. Unfortunately, there are also companies that claim to be grease producers but which resell others’ production, and in the worst case, said Danilov, “pirate production of expensive greases under VNIINP and other authori-tative companies’ brands. Generally these products are of low quality.”

In Russia today, grease is at a low level of development. “Our goal is to upgrade and replace imports,” Danilov contin-ued, saying he believes that the ratio of imports to domestic grease is about one-to-one now. “Imports are higher quality.”

Some positive changes have occurred in Russia’s grease production, he continued, including a reduction in production of

“The most

complicated problem

requiring solving is

modernization of technology

and our raw material base.”– Alexander Danilov, VNIINP


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Growth Forecast for Middle East, Africa

Finished lubricant demand in the Mid-dle East and Africa are each projected to grow at close to 2.5 percent per year from 2009 to 2019, according to study released in November by Kline and Co. The study, “Lubricant Basestocks in Africa and the Middle East 2010: Market Analysis and Opportunities,” concluded that the Mid-dle East will grow slightly faster – around 2.7 to 3 percent annually compared to be-tween 1.8 percent and 2 percent for Af-rica. The U.S. consulting firm cited the same main causes for both regions: popu-lation growth, rising disposable incomes and rapidly expanding car, truck and bus fleets. Those fleets are also modernizing, the company noted.

“This is predominantly an automotive market, with automotive oils accounting for close to 75 percent of the total de-mand,” Project Manager Milind Phadke said during an Internet press conference announcing the study. That includes 42 percent heavy-duty motor oils, 25 percent

passenger car motor oils and 8 percent other automotive lubricants, he said.

General industrial oils accounted for approximately 13 percent of the markets in both regions, Kline found, and indus-trial engine oils about 3 percent. The nine percent remaining are considered unclas-sified oils. Some general industrial oils and industrial engine oils are consumed in the Middle East in the petroleum sector as well as the marine sector, Phadke added.

Kline estimated finished lubricant demand in Africa and the Middle East reached 3.3 million metric tons in 2009. Iran is the biggest country market, ac-counting for 20 percent of the combined total for the two regions. The United Arab Emirates is responsible for 16 percent of their combined demand, followed by Egypt with 11 percent, Saudi Arabia with 9 percent and South Africa with 8 percent.

Lube blending operations in the two regions consume approximately 3.3 mil-lion tons per year of base stocks, the study found. The regions produce 2.5 million t/y of base stocks, all of it API Group I,


Lube Demand by Product Category, Middle East and Africa, 2009

Source: Kline and Co.

Total: 3.3 million tons

Heavy-duty motor oils

Passenger car motor oils

General industrial oils

Other automotive lubricants

Industrial engine oils

Other

42%25%

13%

9%8% 3%

creating a deficit of 700,000 t/y. Imports fill the gap, and roughly half of the import-ed stocks are Group II or III.

Shell Sells Metalworking BusinessHoughton International reached an

agreement in November to acquire Shell’s metalworking and metal rolling oils busi-ness. The companies did not disclose terms of the transaction, which includes manufacturing sites in Germany, France and Italy.

Lubricant Demand Middle East & Africa | 2009 - 2019

2009 2014 2019

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Advertise in Lube Report We do

Advertise in Lube Reportwww.LubeReport.com

Reach 14,200 subscribersin 120 countries every week

Mike Lewis, MotivaHigh quality and accuracy. In Lube

Report, information on premium Motivabase oils is only a click away.

Siang Yong Lim, InfineumEssential industry news medium. Ourads in Lube Report convey our brandand product messages to a wider, relevant audience.

For advertising informationcontact Gloria Steinberg [email protected]+1 703-536-7676 or 800-474-8654

Ed Hudgins, ErgonLube Report is the flagship of our industry. If

you want people to know what’s new withyour business, advertise in Lube Report.

Rob Shama, Afton ChemicalA quick snapshot of industry newsthat I can count on every week. Adsare cost-effective, reach a global sub-scriber base and reinforce our promocampaigns with our target audience.

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Reach 14,200 subscribersin 120 countries every week

Mike Lewis, MotivaHigh quality and accuracy. In Lube

Report, information on premium Motivabase oils is only a click away.

Siang Yong Lim, InfineumEssential industry news medium. Ourads in Lube Report convey our brandand product messages to a wider, relevant audience.

For advertising informationcontact Gloria Steinberg [email protected]+1 703-536-7676 or 800-474-8654

Ed Hudgins, ErgonLube Report is the flagship of our industry. If

you want people to know what’s new withyour business, advertise in Lube Report.

Rob Shama, Afton ChemicalA quick snapshot of industry newsthat I can count on every week. Adsare cost-effective, reach a global sub-scriber base and reinforce our promocampaigns with our target audience.

“The decision was made to exit the metalworking and metal rolling lubricants business following a comprehensive stra-tegic review,” a Shell spokesperson told Lube Report. “This strategy fits with our drive to simplify our global downstream portfolio, concentrating our footprint and focusing on selective growth.”

Houghton, headquartered in Valley Forge, Pennsylvania, U.S., cited several reasons for its attraction to the deal. It said Shell Metalworking Oils has some of the best talent in the market, solid prod-ucts and technologies, and a well-estab-lished distributor network, along with a strong global presence, “especially in high growth countries like China, Mexico, Rus-sia, Turkey, India and Thailand.”

The factories are in Dortmund, Ger-many; Turin, Italy; and Rouen, France. Houghton will also acquire the product brand names, the associated trademarks, intellectual property, customers and em-ployees.

Houghton asserted it has no informa-tion at this time about any job cuts, or changes for the Shell metalworking oils plants. Houghton’s executive manage-ment team will assume responsibility for the Shell metalworking oils business once the sale closes, which was expected to happen early this year.

Russian Lubes Regain Ground, Slowly Russia’s lubricant market made a mod-

est rebound in 2010 but will require sever-al years to fully recover, an industry insider told a Moscow conference in November.

Speaking at Lubricants Russia 2010 conference, InfoTek General Director Ta-mara Kandelaki said that Russia’s motor oils demand in 2009 declined 23 percent compared to the year before.

“Unlike the other developing econo-mies (China for example) that reported one-digit demand growth, Russia’s lubri-cant market experienced a huge decline in 2009,” she said. “It’s the lowest level in the last five years, and demand won’t reach the pre-crisis level in the next two or three years.” Russia’s total lube demand in 2009 stood at 1.3 million tons, a 13 percent decline compared to the year be-fore, Kandelaki said. “The country’s motor

oil demand last year stood at 768,000 tons, down from 996,000 tons in 2008. Industrial lubes demand in 2009 was 583,000 tons.

Foreign marketers importing to Rus-sia did not avoid the recessionary fallout. The biggest, ExxonMobil, lost 21 per-cent of its Russian sales, compared to the year before. “Total finished lubricants im-ports last year stood at 223,000 tons or more than a 20 percent drop compared to 2008,” Kandelaki said. Shell’s sales last year contracted 18 percent, compared to 2008, while BP’s have increased only 2 percent.

Russia’s biggest automotive lubes mar-keter in 2009 was Lukoil, according to In-foTek. It held a 28 percent market share, followed by Rosneft with 18 percent mar-ket share. TNK-BP was third, with 15 per-cent share, followed by ExxonMobil with 7 percent, Shell with 6 percent and Gaz-prom Neft with 5 percent.

Madius Appointed by Axel Christiernsson

Constantin Madius was named group product manager of Axel Christiernsson International in December. He has been with the company since 1998 and most recently was a sales account manager. He has also been responsible for customer training courses and lubrication seminars that form the basis of Axel’s “Grease Ge-nius” program.

Headquartered in Nol, Sweden, Axel Christiernsson is a producer and toll man-ufacturer of lubricating greases.

Croda Taps NottinghamChris Nottingham has been appointed

vice president of Croda Lubricants. For the past two years he served as vice president of purchasing and before that was man-aging director of Croda Singapore for a decade.

Based in Goole, East Yorkshire, U.K., Croda supplies synthetic base fluids and performance additives derived from re-newable and sustainable raw materials.

Shell Delays Russian PlantThe opening of the first foreign-owned

lubricants blending plant in Russia has been pushed back a year, to late 2011, but Royal Dutch/Shell says it remains commit-ted to the project.

The British-Dutch energy giant started building the plant last year. The 180,000 t/y facility located in Torzhok, in the Tver region, was originally scheduled to open by the end of 2010 or early this year, the company said. It will be one of the largest in the Shell network worldwide.

A Shell spokesman said delays are com-mon for such large projects. She cited several reasons for this delay, including design amendments, material delivery de-lays and “developmental issues.”

The city of Torzhok is located near the main transportation routes that connect Moscow and St. Petersburg and it is ap-proximately equidistant from the two ma-jor cities.

Repsol Expands in Asia Spain’s Repsol reached agreement

with Malaysian UMW Group to produce and distribute Repsol lubricants through-out China, Malaysia and other countries in the region, including Singapore, Brunei, Papua New Guinea and Myanmar.

The five-year deal is part of Repsol’s in-ternational branding expansion plan. The Madrid-based company said it expects to market more than 20,000 tons of lubri-cants in Asia-Pacific by the fifth year of the deal. That would exceed 25 percent of its annual sales in Spain.

The products will be blended in UMW plants in Malaysia and China. Repsol sells lubricants to the automotive, motorcycle

Constantin Madius



NEWSMAKERS

COMPANY PAGEAfton Chemical 7Anderol 16BRB International BV 33Chevron 41Chevron Oronite INSIDE BACK COVERChevron Phillips Chemical 45Croda Lubricant Additives 55ELGI 54Emirates Lube Oil Co. 9Ergon INSIDE FRONT COVERExxonMobil Chemical 5General Petroleum 21Infi neum 15Inolex 12IPAC 17Lube Report 50Lubes’n’Greases EMEA 44Lubrizol BACK COVERModrica 23Mogoil 8Multisol 38Munzing 39Nynas 11Petronas 27Rhein Chemie 57Rohmax 13Russia & CIS Base Oils and Lubricants Conference 52SK Lubricants 49Sonneborn 29UNITI 12Universal Lubricants 47Vanderbilt International SARL 35Verkol Lubricants 46


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World RefinngAssoc iat

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5 - 7 APRIL 2011, MOSCOW , RUSSIA

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BASE OILS ANDLUBRICANTS INRUSSIA AND THE CIS4TH ANNUAL MEETING

Why you should attend the Base Oils and Lubricants 4th Annual Meeting

=1, I

Learn suplly and demand trends and forecast to developyour business strategy

If you want to know more about this event, go to:

Excellent conference, a lot of valuable information, many useful contacts.The only suggestion is to keep it up next year!

An event which provides great opportunities for constructive anduseful networking between potential suppliers and operators!

Alexander Matukhnov , Director , ATR INTERNATIONAL

Situations Wanted

15 years lubes & base oils experience in Sales Management, Sales, Marketing,

Product Management & Technical

Experienced in growing business throughout Europe and FSU, direct and via distribution

Graduate Mechanical Engineer, MBA & Masters Marketing

UK resident, willing to relocate to North America, Middle East, FSU, Far East

Seeks Business Development / Sales Management Position

Email: [email protected]

REllis.indd 1 12/15/10 10:13 AM

and industrial sectors. “We anticipate automotive and motorcycle demand especially, and expect signifi cant growth in both Malaysia and China for both these products,” spokes-man Kristian Rix said.

Repsol currently markets its lubricants in more than 60 countries including Indonesia, Japan, the Philippines and Tai-wan. UMW is a conglomerate based in Malaysia involved in four core businesses: automo-tive, equipment, manufactur-ing and engineering, and oil and gas.

Clariant Makes Poly-etheramines

Clariant has added poly-etheramines to the range of specialty chemicals pro-duced at its Gendorf, Germa-ny, plant. Polyetheramines are used in a variety of applica-tions and as intermediates in the production of numerous chemical products, including dispersants used in lubricants and other applications.

Clariant said many seg-ments that use polyethera-mines are growing and that it began producing them be-cause of rising demand. The change required installation of a new reactor at the com-pany’s nitril-amine plant in Gendorf. The company said it will initially focus on providing polyetheramines to a core list of customers in the crop pro-tection and construction mar-kets, but it anticipates offering to additional customers at a future date.

BP, Shell Unload Zim-babwe Assets

A Zimbabwean-controlled investment company agreed

in October to purchase BP and Shell operations in Zimbabwe, including a dormant lubricant plant.

The purchasing company is Masawara Plc, which is listed on the London Stock Exchange and registered on the British Crown offshore fi nancial cen-ter of Jersey, although its main offi ce is in Harare, Zimbabwe. According to Newsday Zimba-bwe, Shingai Mutasa, one of the country’s richest business tycoons, owns a 63 percent stake in the company.

Shell operates under BP’s license to do business in Zim-babwe. Collectively the activi-ties are known as BP and Shell Marketing Services Ltd. and include 73 service stations, 10 storage depots and 87 em-ployees. BP confi rmed the transaction, but neither it nor Masawara disclosed the price.

Masawara noted that the deal still awaits approval from competition authorities. Newsday indicated that such consideration largely hinges on concerns about preserving local ownership, so the agree-ment is expected to easily gain approval.

Masawara representatives did not discuss plans for the lu-bricant plant.

SKF Buys Lincoln IndustrialSKF has agreed to buy U.S.

lubrication systems provider Lincoln Holdings Enterprises, Inc. from Harbour Group for 748 million. SKF said the ac-quisition will help it expand its growing lube systems seg-ment.

“Lubrication systems is a very important busi-ness for SKF and also one of our technology platforms,”

ADVERTISERS INDEXCOMPANY PAGEAfton Chemical 7Anderol 16BRB International BV 33Chevron 41Chevron Oronite INSIDE BACK COVERChevron Phillips Chemical 45Croda Lubricant Additives 55ELGI 54Emirates Lube Oil Co. 9Ergon INSIDE FRONT COVERExxonMobil Chemical 5General Petroleum 21Infi neum 15Inolex 12IPAC 17Lube Report 50Lubes’n’Greases EMEA 44Lubrizol BACK COVERModrica 23Mogoil 8Multisol 38Munzing 39Nynas 11Petronas 27Rhein Chemie 57Rohmax 13Russia & CIS Base Oils and Lubricants Conference 52SK Lubricants 49Sonneborn 29UNITI 12Universal Lubricants 47Vanderbilt International SARL 35Verkol Lubricants 46


NEWSMAKERS

ContaCt (T)#31 20 6716162 (F)#31 20 6732760 [email protected]

for detailed information www.elgi.org/AGM11

We look forward to welcoming you to our 2011 aGm in Paris.

30th April – 3rd May 2011Paris FrancePullman Tour Eiffel Hotel

Early cut off date for accommodation at Pullman Tour Eiffel Hotel -1st february 2011

23rd annual General meeting

Chief Executive Offi cer and President Tom Johnstone said in a statement. “Com-bined with our other platforms it enables us to help our customers reduce friction and energy consumption.”

SKF, which is based in Gothenburg, Sweden, is primarily a bearing and lubri-cation system supplier that also offers its own line of lubricants. It said it was attract-ed to Lincoln Industrial because of its com-plementary product portfolio – which has little overlap with SKF’s – and because of its strong sales and manufacturing pres-ence in North America and Asia.

SKF said Lincoln is also profi table, hav-ing earned a profi t margin of approxi-mately 24 percent on sales of nearly U.S. $400 million (300 million) in 2010. Lincoln has 2,000 employees.

FEBRUARY

1-3. OilDoc Conference and ExhibitionKUKO Conference Center, Rosen-heim, Germany. Contact: As-trid Hacklander, OilDoc. Phone: +49 8034 9047-700.E-mail: [email protected] Web: www.oildoc.com

24-25. ICIS World Base Oils Conference Lancaster Hotel, London, U.K. Con-tact: Emiley Partington, ICIS, Quadrant House, Sutton, Surrey, SM2 5AS, UK. E-mail: [email protected] Web: www.icis.com

APRIL

5-6. UNITI Mineral Oil Technology CongressMaritim Hotel Stuttgart, Stuttgart, Germany. Contact: Carmen Fogel, UNITI-Mineraloeltechnologie GmbH, Jagerstrasse 6, D-10117, Berlin. Phone: +49 (0) 30 755 414-400. Fax: +49 (0) 30 755 414-474. E-mail: [email protected] Web: www.umtf.de

5-7. Base Oils and Lubricants in Russia and the CIS ConferenceMoscow. Contact: Jekaterina Sunda-ralingam, Conference Director, World Refi ning Association, 5th Floor, 86 Hat-ton Garden, London, EC1N 8QQ, UK.Phone: +44 (0) 207 067 1800. E-mail: [email protected] Web: www.wraconferences.com

5-7. Tribology 2011 University of Pretoria Conference Centre, Pretoria, South Africa. Con-tact: Gillian Fuller, South Africa In-stitute of Tribology, P.O. Box 1240, Kelvin, South Africa, 2054.Phone: +27 11 802 5145. E-mail: [email protected] Web: www.sait.org.za

30-May 3. ELGI 23rd Annual General Meeting Hotel Pullman Paris Tour Eiffel, Par-is. Contact: Carol Koopman, Execu-tive Director, European Lubricat-ing Grease Institute, Hemonylaan 26, 1074 BJ, Amsterdam. Phone: +31 (0) 20 67 16 162. Fax: +31 (0) 20 67 32 760. E-mail: [email protected] Web: www.elgi.org

Harbour is a privately owned company based in St. Louis, U.S. The sale is subject to regulatory approval.

IPAC Sets Up Shop in DubaiU.S.-based additive supplier IPAC

opened an offi ce and warehouse in the United Arab Emirates in October. The fa-cilities will be a regional headquarters for the company’s operations in the Middle East, Africa and Asia.

The offi ce and warehouse are man-aged by Dippu M.G. Nair and Naren Sa-chanandani.

“We have analyzed this market for many years and with the ever-growing world demand for automotive, indus-trial and marine lubricants, this region has shown a steep growth for lubricant

additives,” Chief Executive Offi cer Brian Cereghino said.

IPAC’s corporate offi ce is in Dublin, California, U.S. It supplies lube additive packages and components.

BRB Opens Chicago FacilityBRB International’s subsidiary in

the U.S. opened a new regional head-quarters outside Chicago. In addition to offi ces, the new facility includes a manu-facturing plant and a warehouse. Offi -cials said it is part of a strategy to grow in the U.S.

Headquartered in Itervoort, Neth-erlands BRB supplies silicones, lubri-cants, lube additives and additive components. o

Industry Calendar


NEWSMAKERS

EuropeanLubricatin g Grease

Institute

Innovation to benefit...Our worldOur environmentOur future

www.crodalubricants.com

Leading the way in naturally derived ingredients

Chief Executive Offi cer and President Tom Johnstone said in a statement. “Com-bined with our other platforms it enables us to help our customers reduce friction and energy consumption.”

SKF, which is based in Gothenburg, Sweden, is primarily a bearing and lubri-cation system supplier that also offers its own line of lubricants. It said it was attract-ed to Lincoln Industrial because of its com-plementary product portfolio – which has little overlap with SKF’s – and because of its strong sales and manufacturing pres-ence in North America and Asia.

SKF said Lincoln is also profi table, hav-ing earned a profi t margin of approxi-mately 24 percent on sales of nearly U.S. $400 million (300 million) in 2010. Lincoln has 2,000 employees.

FEBRUARY

1-3. OilDoc Conference and ExhibitionKUKO Conference Center, Rosen-heim, Germany. Contact: As-trid Hacklander, OilDoc. Phone: +49 8034 9047-700.E-mail: [email protected] Web: www.oildoc.com

24-25. ICIS World Base Oils Conference Lancaster Hotel, London, U.K. Con-tact: Emiley Partington, ICIS, Quadrant House, Sutton, Surrey, SM2 5AS, UK. E-mail: [email protected] Web: www.icis.com

APRIL

5-6. UNITI Mineral Oil Technology CongressMaritim Hotel Stuttgart, Stuttgart, Germany. Contact: Carmen Fogel, UNITI-Mineraloeltechnologie GmbH, Jagerstrasse 6, D-10117, Berlin. Phone: +49 (0) 30 755 414-400. Fax: +49 (0) 30 755 414-474. E-mail: [email protected] Web: www.umtf.de

5-7. Base Oils and Lubricants in Russia and the CIS ConferenceMoscow. Contact: Jekaterina Sunda-ralingam, Conference Director, World Refi ning Association, 5th Floor, 86 Hat-ton Garden, London, EC1N 8QQ, UK.Phone: +44 (0) 207 067 1800. E-mail: [email protected] Web: www.wraconferences.com

5-7. Tribology 2011 University of Pretoria Conference Centre, Pretoria, South Africa. Con-tact: Gillian Fuller, South Africa In-stitute of Tribology, P.O. Box 1240, Kelvin, South Africa, 2054.Phone: +27 11 802 5145. E-mail: [email protected] Web: www.sait.org.za

30-May 3. ELGI 23rd Annual General Meeting Hotel Pullman Paris Tour Eiffel, Par-is. Contact: Carol Koopman, Execu-tive Director, European Lubricat-ing Grease Institute, Hemonylaan 26, 1074 BJ, Amsterdam. Phone: +31 (0) 20 67 16 162. Fax: +31 (0) 20 67 32 760. E-mail: [email protected] Web: www.elgi.org

Harbour is a privately owned company based in St. Louis, U.S. The sale is subject to regulatory approval.

IPAC Sets Up Shop in DubaiU.S.-based additive supplier IPAC

opened an offi ce and warehouse in the United Arab Emirates in October. The fa-cilities will be a regional headquarters for the company’s operations in the Middle East, Africa and Asia.

The offi ce and warehouse are man-aged by Dippu M.G. Nair and Naren Sa-chanandani.

“We have analyzed this market for many years and with the ever-growing world demand for automotive, indus-trial and marine lubricants, this region has shown a steep growth for lubricant

additives,” Chief Executive Offi cer Brian Cereghino said.

IPAC’s corporate offi ce is in Dublin, California, U.S. It supplies lube additive packages and components.

BRB Opens Chicago FacilityBRB International’s subsidiary in

the U.S. opened a new regional head-quarters outside Chicago. In addition to offi ces, the new facility includes a manu-facturing plant and a warehouse. Offi -cials said it is part of a strategy to grow in the U.S.

Headquartered in Itervoort, Neth-erlands BRB supplies silicones, lubri-cants, lube additives and additive components. o

Industry Calendar


NEWSMAKERS

CRODLubricant Addidve

Wit'

Product News

FlowSyn streamlines experiments

Gear oil controls leaks

Study Analyzes India“Opportunities in Lubricants 2010:

India Market Analysis,” a study from Kline & Co., offers background and insight on challenges, trends, developments and opportunities in the Indian lubes market. Covering the consumer and commercial categories and both the automotive and industrial segments, the study address-es how to target customers, how formu-lators and marketers compete, and how regulation trends affect the market.

This study identifi es channels of dis-tribution, key business challenges and which product categories, end use seg-ments and regions offer opportunities. It is valuable for industrial and automotive OEMs, base stock and additive suppliers and marketers of fi nished lubricants, says Kline. Subscription costs U.S. $35,000, while hard copies are $500. www.klinegroup.com o

Turbine Oil Approved for DreamlinerRolls-Royce has approved BP Turbine

Oil 2197 for use in Trent 1000 engines on-board Boeing 787 Dreamliner passenger aircrafts. Its thermal and oxidative stability have been shown in many aircraft applica-tions, according to Air BP Lubricants.

The supplier says the oil’s perfor-mance has been monitored in rig and

engine tests in accordance with validation processes approved by European and U.S. aviation safety regulators. It meets SAE AS5780A specifi cation, HPC classifi cation for performance in thermally stressful applications and HTS Class mili-tary specifi cation MIL-PRF-23699. www.airbp.com

Golden Super Storms NigeriaConoil says its new brand of lubricant,

Okada Golden Super Oil for motorcycles and tricycles, provides smoother opera-tion, quick starting, increased fuel effi -ciency and lower cost of operation. Ac-cording to the Nigerian company, Okada Golden Super 4T prevents power loss and clutch slippage.

At the product introduction in La-gos, the oil was demonstrated to operate without producing excessive exhaust smoke – a benefi t for human health and the environment. Golden Super Oil is avail-able in Conoil’s business locations across Nigeria.www.conoilplc.com

Prevent Leaks from WithinWhitmore’s Innerseal leak-control

gear oil is now available in the Irish and U.K. markets from Industrial Specialty Lu-bricants. Innerseal was designed for en-closed mining and industrial gear cases, including those operating under heavy loads. It can be used on a range of equip-ment without fi ltration systems to contain leaks and reduce wear.

Particles formed by its additives pro-duce mesh-like structures in gaps, reduc-ing or preventing leaks through loose fi t-tings, small cracks and poor seals in large gear cases. Use Innerseal to increase the life of gears with broken cases in lieu of frequently replacing seals, and topping off oil. www.islubricants.co.uk

Automated Flow ChemistryThe FlowSyn Auto-LF module from

Uniqsis allows fl ow chemists to per-form multiple experiments with multi-ple reagents automatically. This machine quickly produces large quantities of com-pounds by simultaneous loop fi lling and fraction collection. Use it to optimize ex-periments, prepare focused combinatorial libraries using fl ow reactions and to per-form reagent screening.

Openly accessible and user-friendly, the FlowSyn Auto-LF requires no injec-tions ports. Integrated wash protocols minimize cross-contamination. Precise

sampler calibration to position samples in loops ensures volumetric accuracy. www.uniqsis.com


Solutions for challenging appllcatfon

the latest technical requirements for modern hydraulic fluids.

Rhein Chemie Rheinau GmbHDuesseldorfer Strasse 23-2768219 Mannheim, GermanyPhone +49 (0)621-8907-0Fax +49 (0)621 8907-654Ioa .rcrC?rheinchemie.com

?A NXESS rww.rheinchemie.comw

i

The New Generation:Rhein Chemie's Prem ydraulic PackagAdditi

Low zinc hydraulic package showing excellent antiwear properties and hydrolytic stability.It is designed for high-performance hydraulic fluids HF-0 and HLP formulated to meet

Rhein Chemie Corporation145 Parker CourtChardon, OH 44024, USAPhone +1 440-285-3547Fax +1 [email protected]

heinChemieheinChemie

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API Group II base stocks are generally perceived as better than Group I oils,

and in many ways this perception is ac-curate. Group IIs are more highly refined and by definition have higher viscosity in-dex, fewer impurities and less volatility – all things that are favorable for most lubri-cant applications.

But the comparison is not quite that simple, as a Rhein Chemie official ex-plained during a presentation at the ICIS Middle Eastern Base Oils & Lubricants Conference in October. Some of the prop-erties that make Group II perform bet-ter in some ways can detract from other performance parameters. That need not prohibit the use of Group IIs, Technical Manager Frank Bongardt said, but it does require adjustment in formulation.

Group I oils are the dominant catego-ry of base stocks, accounting for rough-ly three quarters of worldwide demand. For the past two decades, though, the in-dustry has trended toward Group II and Group III oils, which are produced through more intensive refining and which have higher viscosity indices, less sulfur and nitrogen and lower levels of aromatic hy-drocarbons. As Bongardt noted, both qualities were highly valued for automo-tive lubricants, which make up approxi-mately half of the total market.

“Those factors lead to longer lubricant life times and drain intervals,” he said. “They also have environmental impacts like reductions [in emissions] of sulphur

and aromatics. And there are commercial benefits because the price premiums [over Group I] are low, but they save blending costs by allowing lower additive treat rates.”

The drawback is this: Reduced sul-fur levels and more uniform composition of hydrocarbons means Group II oils have fewer molecules that are prone to bond; they do a poorer job of dissolving additives.

“Additives which have good solubility and performance in Group I base oils, may have only a limited solubility in modern base fluids... due to the non-polar, par-affinic structure and the absence of aro-matic compounds,” Bongardt said.

To illustrate the effects, he showed re-sults of tests that Rhein Chemie conduct-ed on samples of hydraulic oils, some for-mulated with Group I base stocks, others with Group II, some using additive pack-ages that contained zinc, some zinc-free.

All combinations passed tests that measure high-temperature performance and hydrolytic stability, the Mannhe-im, Germany-based chemical company found, and hydraulic oils with zinc-con-taining additives passed filterability tests whether they contained Group I or Group

II base stocks. Filterability is important be-cause hydraulic systems have filters to re-move contaminants. The filters should not remove components of the lubricant.

The zinc-free samples made with Group I stocks also passed the filterability test, Bongardt said, but those made with Group II failed. The reason was clear and not very surprising, he added. The zinc-free additives did not dissolve as well in Group II.

The problem can be addressed, Bon-gardt said, by adjusting formulas to make the additives more soluble in Group II. And this, he said, is clearly the most sensible route, because the other advan-tages of Group II oils make such adjust-ments worthwhile.

He concluded with a prediction.“Demand for Group II oils will grow in

the future worldwide and in the Middle East,” he said. “The technical advantag-es provided by Group II oils are obvious and will lead to longer lifetime of specif-ic industrial and automotive lubes. The shift from Group I to high-quality Group II oils does not require new complete ad-ditive technology. But modifications in respect to solubility of packages... are unavoidable.” o

Group II for Industrial Lubes: Pros and Cons

hydraulic fluids require filterability, which requires solubility.


LAST WORD BY TIM SULLIVAN

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With you every step of the way.

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