the recent issue

December 2013
Publication of LUKOIL Lubricants Company
(LLK-International)
New Year is a holiday longed for by perhaps all people on Earth.
Let the New Year give you belief that it will be a year of new achievements, successes
and fulfilments! Be healthy and happy. I wish you a festive spirit!
LUKOIL President V. Yu. Alekperov
LUKOIL Chairman G. M. Kiradiev
CONTENTS
2 HAPPY NEW YEAR!
3 FORUM
6
Moscow International Lubricants Week 2013
6 CORPORATE AFFAIRS
LUKOIL brand is synonymous with carefully calibrated
and effective movement forward
8 PARTNERSHIP
Breakthrough in Ukraine
12
10 Northern supply lines
12 LUKOIL lubricants in Georgia
14 LUKOIL lubes for key clients in Romania and Macedonia
16 LUKOIL starts producing lubes in Austria
16
18 Road to China
20NEWS
20
«МАСЛА@ЛУКОЙЛ»
#4 December 2013
"Масла@ЛУКОЙЛ"
is a publication of LLK-International
Publisher: RPI
Address: LLK-International, 6 Malaya
Yakimanka, Moscow 119180
Phone: +7 (495) 980 39 12
e-mail: RybalchenkoIA@lukoil.com
Press run: 2,000
The magazine is registered by the Federal
Service for Media Law Compliance
and Cultural Heritage.
Registration certificate ПИ №ФС77-28009
1
Dear Colleagues,
Dear friends!
I
MAKSIM DONDE,
CHIEF EXECUTIVE
LLK INTERNATIONAL
2
t’s a tradition that before New
Year we summarize the outgoing year, thoroughly weigh past developments and ask ourselves what
has been done. Was it done well?
Effectively? How can we improve our
performance?
So, what kind of a year was 2013 for
us? It undoubtedly proved extremely
rich in events. This applies both to personnel decisions – the management
team of LLK-International considerably changed – and to business processes.
The last day of the year is to be marked
by a landmark event – our Company
will integrate Volgograd and Perm refineries’ oil blending and filling sites.
I am confident that this move will allow us to respond more quickly to our
customers’ needs while providing a
strong level of service.
I would like to mention the most important achievements from a long list.
First of all, I am pleased to note that a
new generation of engine oil LUKOIL
GENESIS was delivered to the Russian
market and sold through domestic service stations. A key issue in facilitating
the dealers’ task was the signing of
contracts with automakers for first fill of
lubricants. This year, lube supply contracts were signed with Sollers Trading
House and ROLF Group. We started
supplies of unique UZAUTOOIL and
conventional LUKOIL LUX oils to the
entire dealer network of UzDaewoo
in Russia.
In 2013, we continued supplies
to AVTOTOR Company as LUKOIL
GENESIS engine oils became the
first fill lubricants for Opel and
Chevrolet, while LUKOIL gear oils
became the first fill oils for engines
of Hyundai trucks and KIA cars.
The success of subsidiary LUKOIL
Marine Lubricants also merits special mention. LUKOIL’s achievements on the marine oils market
were so impressive that we decided to dedicate them an entire article in the magazine as well as other important events of the outgoing
year.
In conclusion, I would like to thank
all our staff for their diligent work.
Any achievement is the result of
consistent and productive labor.
Uncompromising work, first of all –
on oneself – is the basis of success.
Therefore, the drive for self-improvement should become the unwavering
philosophy for each and every one
of us. It is important to remember that
professionalism is unthinkable without effective teamwork. The company's success is impossible without
joint efforts, mutual respect, trust and
coordination of action.
I am confident in the bright future of
our business!
A tough, albeit interesting, year lies
ahead of us. I wish all of us patience,
energy, brilliant ideas and bold initiatives, as well as good health, family
happiness and harmony.
FORUM
Moscow International
Lubricants Week 2013
Moscow International Lubricants Week is held every year around midNovember. This is an event which usually brings together all large players
and experts from this market segment. With 2014 right around the corner
and the upcoming 10th anniversary of the conference, we have analyzed
changes in the format of this event. The main conclusion is that interest
in lubricants is steadily rising, since over the past 10 years the conference
has turned from a narrow industry event into a high-profile international
forum.
O
fficial data eloquently
show that the topic of lubricants is gaining popularity every year that goes by. It is also becoming increasingly clear that this
two-day event is not long enough
to hear all of the interesting topics
and issues raised by the numerous
delegates from the lubricants industry. For this reason, the agenda of
the conference was expanded to a
• The 4th international conference
“Plastic Lubricants – 2013”
• The 4th special exhibition “Service
and Equipment for the Lubricants
Market – 2013”
• The workshop “Infineum
Trends-2013”
The conference is traditionally attended by the whole production chain of
the oil business: producers of base
Conference data: 417 participants, representatives from
163 companies, 23 countries.
whole week of discussions covering
industry trends and topics.
Since its inception, the conference
has seen the number of its delegates
quadruple and in recent years it has
been attended by over 400 people.
The number of companies attending
the event has been increasing every
year and the range of attendees currently spans over 20 countries. For
instance, this year was the first time
when delegates showed up from Iran,
Nigeria and Ghana. The range of
events at the conference underscores
broad public interest in the most diverse aspects of the industry. This year
the official events included:
• The 9th international conference
“Production and the Lubricants
Market – 2013”
oils, additives and branding companies that certify tools and laboratories, as well as plants that manufac-
ture machinery. This clearly shows that
the event is of interest not only to the
representatives of Russian and foreign
oil companies or refineries, but also to
lube industry representatives as well
as automakers, trading companies,
dealerships and consultancies, financial and investment companies. And
aside from major industry players, an
increasingly large number of small independent companies are showing up
at the forum every year.
The broad range of attendees makes
it possible to deal with the most diverse lube industry topics and assess
such topics from multiple viewpoints.
Alongside narrow technical presentations, the agenda also features marketing and trade issues pertaining to the
development of the lubricants business.
3
LLL-International has been a general sponsor of International Lubricants
Week for many years. This year
presentations were given by Viktor
Zhuravsky, general director of Lukoil
Marine Lubricants Ltd, Mikhail
Babushkin, deputy general director of
LLK-Naftan, Vladislav Smirnov, head
of sales project for the energy sector, sales department on the domestic
market of LLK-International.
According to most of the people who
attended the conference, one of the
best presentations was delivered by
LLK-International’s Viktor Zhuravsky
“Development of the global marine lubricants business”, which was quoted
not only by industry journalists but also
by the other speakers. As a matter of
fact, the marine lubricant business of
LLK Marine was the focus of constant
attention. This was no coincidence,
since LLK Marine has been the pride
of LLK-International for more than a
year already. Interest in this presentation can be explained by the fact
that Viktor Zhuravsky talked not only
about the success of his company but
also about the marine lubricants segment as a whole. Apparently, most of
the participants were not aware of the
features of this market, especially given the fact that aside from LLK-Marine
there are no other Russian companies
that are professional participants of
the marine lubricants industry.
THE CONFERENCE ATTENDEES ALWAYS HAVE AMPLE OPPORTUNITY TO TOUCH BASE
AND CHAT WITH PEERS
4
Notably, many of the presentations
were analytical surveys based on
specific individual examples. Many
were surveys of a single market segment and clarified their main topics
through illustrations from the activity of
their companies. This same principle
was used in the presentation of another representative of LLK-International,
Vladislav Smirnov, who addressed
specific features of the Russian energy
industry from the angle of how lubricants are used.
Mikhaill Babushkin, in his presentation “Developing production of highly efficient packages of additives at
LLK-Naftan, talked about the recent
success in the joint venture between
Russian LLK Naftan and Belarusian
Naftan. This JV has for many years
been the leader of additives production in FSU countries.
The presentation of Tomas Rühle from
BASF SE on connections between
base oils and additives was also of
great interest, as well as the presentations given by Eidan Rose (Evonik Oil
Additives) and Kosuke Fujomoto from
Toyota Motors Corporation.
The presentation of Naira Aslanian
from the Kline Group contained some
interesting data on the Russian lubricants market. According to data from
that company, Russia is nowadays the
largest European consumer of lubricants. At the end of 2012 the scope
of consumption in the country amounted to 1,705,000 tons or 26% of the
European market and 4% in global
terms. Over the next five years Kline
Group expects the consumption of lubricants in Russia to increase by 10%,
and 18% over the next 10 years.
Individual consumers (+27% over the
next 10 years) are expected to account for the bulk of incremental consumption, as well as the industrial segment (+24% during the same length
of time). Also, the company forecasts
facet of the event. During the coffee
breaks the halls adjacent to the conference rooms were full of people engaged in lively conversation. This is a
sure sign that the event truly enjoyed
popularity and came at the right time.
According to Kline Group, nowadays Russia is the biggest
European consumer of lubricants. At the end of 2012 the scope
of consumption in the country amounted to 1,705,000 tons or
26% of the European market and 4% in global terms.
that the consumption of lubricants in
the commercial segment will remain
roughly unchanged compared to the
level in 2012.
Summing up the conference, it should
be noted that the Russian lubricants
market is in a state of transition towards
a more mature stage of development.
In an effort to find ways and means of
improvement, roll out new products,
manufacturers are using trial and error
methods to upgrade production, stabilize quality, minimize image risks and
liability for goods produced.
The fact that the Russian lubricants industry has already grown up and has
reached quite a high level of development is attested by the fact that next
year the organizers of the conference
have promised to add a new exciting
element to the agenda – an industry
award.
Incidentally, it’s no secret that small
talk on the sidelines of the conference
may actually be the most interesting
The conference attendees always
have ample opportunity to touch base
and chat with peers. In addition, a
number of narrowly specialized interest groups made it possible to plan
a variety of breakout sessions. These
events are the launching pad for im-
portant negotiations, some of which
lead to the stipulation of contracts.
“Special thanks to everyone for your
collaboration. It was great to visit Russia and take part in the conference “Production and the Lubricants
Market”. This event was very helpful.
It was very pleasant to see most of the
large companies that operate in the
lubricants industry together in a single venue in Moscow. We will definitely come back to the conference
net year”, said Hossein Salimnezhad,
Sepahan Oil Company.
“It was a wonderful experience for us to
participate in the Moscow International
Lubricants Week. Hopefully the organizers will continue to hold such high-profile events in the future”, said Gbenga
Omokore Olufemi, quality control
manager at LUBCON Nigeria Ltd.
5
C O R P O R AT E A F F A I R S
LUKOIL brand is synonymous
with carefully calibrated and
effective movement forward
Company Lukoil Marine Lubricants became the first and only company
in the world to have received on the basis of full test cycle approval for
a new cylinder oil with a base number of 100 in accordance with the
requirements of the world's two leading manufacturers of marine engines – MAN Diesel & Turbo and Wärtsilä.
A
s a result of testing oil Lukoil
Navigo 100 MCL conducted
in 2011 and 2012, the main characteristics of the product laid as the basis
for a new standard for the newest and
most powerful marine engines and in
September 2013 became mandatory
for all manufacturers of marine oils.
The key advantage of the new development LUKOIL Marine was the ability to effectively confront the so-called
cold corrosion serious consequences of
which become dramatically apparent
as early as the first year of engine operation and may cause millions of dollars of losses both for vessel owners and
manufacturers of marine diesel engines.
6
A combination of these two factors
has given rise to a situation where engines designed for extensive operation at full speeds, are being forced to
run at 10-20% of their nameplate capacity. For the sake of comparison, this
is like forcing a Formula-1 racing car
to cruise at a speed of no more than
40 km/hour.
The reason for cold corrosion lies, on
the one hand, in the development of
diesel engine manufacturing and the
deployment of more cost-efficient,
slow-speed more powerful units with
a super-long piston stroke, and the
global economic downturn, on the
other hand. Shipowners are forced to
seek new ways to cut costs and lower the speed of vessels in an effort to
economize on fuel.
LUKOIL Marine’s key insight is that
its experts were the first in the world
to become aware of the actual risk of
such a problem arising long before it
became a global issue and the associated losses had escalated into millions
of dollars.
"We found not only a timely effective response to one of the greatest technological challenges of recent times, but also created a record
low oil consumption among all global competitors, to be ahead of market requirements," – said General
Director of LUKOIL Marine Zhuravsky
Victor, speaking at a conference on
December 13 devoted to the company’s 2013 achievements.
"As a relatively young company, we
were not afraid to go against the market, despite the authority of his biggest players, who actively promoted
the idea of reducing the base number.
We chose a diametrically opposite
way and the excellent results of our efforts came as a surprise even to the engine manufacturers " – continued Mr.
Zhuravskii : –
"More than two years ahead of all
competitors, LUKOIL MARINE today
is the only company in the world that
has a two-year operating experience
using oils under actual sea conditions
and tens of thousands of running hours
on more than 80 new large and very
large vessels, many of which are the
flagship in their respective segments in
the world. We are also the only company providing global supply of this
product. "
At the moment, all world producers of
marine lubricants are currently being
forced to rethink their position and, in
fact, copy LUKOIL Marine’s approach
to this problem and immediately proceeding with the development and implementation of oils with similar characteristics.
It should be noted that last year was
successful for LUKOIL MARINE in the
segment of medium-and high-speed
trunk piston marine diesel engines.
In 2013 LUKOIL Marine signed an
agreement to supply marine lubricants
to the world’s largest owner and operator of cruise ships, US Carnival
Group. The agreement covers a fleet
of the company’s two UK subsidiaries P&O Cruises and Cunard Line,
including flagship Queen Mary 2,
the globe’s most famous cruise liner,
which is listed in the Guinness Book of
World Records.
Another key project should also be
mentioned. In October 2013 the
company provided the first fill for
the Russian Navy’s Mistral-type
Vladivostok helicopter carrier at the
company’s STX Europe ship yard in
Saint-Nazaire, France.
A €1.2 billion contract to deliver two
such helicopter carriers was signed at
the St. Petersburg International Forum
in 2010.
The expansion of LLK Marine’s business and its technological expertise
has not gone unnoticed. Two respected and widely known professional publications Lloyd’s List and Sea
Trade promptly rated LLK Marine as
one of the top five innovative companies in 2013.
IN OCTOBER THE COMPANY PROVIDED THE FIRST FILL FOR THE RUSSIAN NAVY’S MISTRAL-TYPE
VLADIVOSTOK HELICOPTER CARRIER AT THE COMPANY’S STX EUROPE SHIP YARD IN SAINT-NAZAIRE
Summing up his presentation, Viktor
Zhuravsky noted: “We do not intend
to rest on our laurels and even now
LLK Marine is testing out a new revolutionary system for using lubricants on
board that will allow ship owners to
even better control their costs and also to ensure safe and effective engine
operation irrespectively of the type
of fuel or area of navigation. We are
confident that the LUKOIL brand will
become synonymous for ship owners
with carefully calibrated and effective
movement forward”.
7
PARTNERSHIP
Breakthrough in Ukraine
Collaboration with automakers has always been and still remains one
of LLK-International’s key business areas. Joint projects with foreign car
manufacturers in other countries are especially important. One of the
best illustrations is an agreement signed in September with UkrAVTO, a
leader in the Ukrainian automotive market.
T
he signing of this agreement
was prepared by experts
of the Department for Development
of Sales in Franchised Workshops
over a period of several months.
The point is that UkrAVTO is not sim-
ply a leader in the national market, but also manufactures the full
range of products and imports passenger and commercial transport
vehicles, which are leading global brands, and also has an extenLukoil Lubricants Ukraine takes
part regularly in major nationwide automotive events. One of
the most important of these is the
Capital Auto Show. This year it
was a jubilee event since it has
already taken place 10 times.
Lukoil Lubricants Ukraine acted as the official lubricant partner for the auto show, which was
held on September 14-15 in
UkrAVTO automobile showrooms.
Those who attended the show visited LUKOIL’s display stand had
a chance to become acquainted
8
sive service network. This why a
universal contract between Lukoil
Lubricants Ukraine and UkrAVTO
covers a large number of areas. First
and foremost, it applies to factory
fills of lubricants in the corporation’s
with the company’s new branded
products, while tasting cocktails
blended in LUKOIL’s laboratory
and enjoying some lively dancing.
UKRAVTO
Is the biggest automaker, distributor and service supplier in Ukraine. It is the only
company with a full range of
production. It is the main exporter of vehicles to CIS and
non-CIS countries. UkrAVTO
corp. is the main importer
and official dealer of over 20
well-known global brands of
vehicles.
These include: Daimler AG,
General Motors, Maserati
S.p.A., KIA Motors, Nissan,
Toyota, and Chery. The company has 400 dealerships and
170 service centers.
dealerships. Under the terms of the
agreement, UkrAVTO regulates the
lubricant fills performed by LUKOIL
for all ZAZ vehicles (ranging from
passenger cars to passenger buses)
and Chery concern during the warranty period. These two automakers
currently hold leadership in terms of
sales volumes in the country.
Assessing the collaboration parameters in terms of figures, the minimum
amount of branded products sold
by the service network of UkrAVTO
amounted to about 20 tons during
the first four months of 2013. Also,
about five tons per month go towards production lines. According
to the forecasts of Lukoil Lubricants
Ukraine, starting next year the plan
is to increase the scope of lube supplies to about 10 tons per month
at service stations and the same
amount for production lines.
An important part of the contract is its
marketing component. The partners
reached an agreement on under hood
sticker placement to identify the recommendation for LUKOIL lube fills in
all vehicles during the presales period.
No Ukrainian automakers had used
this practice earlier.
Furthermore, the plan is to take a
number of measures to promote the
LUKOIL brand in the UkrAVTO service network. Some of these mechanisms have been tested and tried
in Russia and other countries, and
include:
• Workshops for dealership employees in each city where the corporation has a footprint
• Working out an incentive program
for master service receptionists/
spare parts sales managers
• Arranging LUKOIL dealership displays (branded lubricant display
stands, point of sale marketing materials)
In view of the above partnership developments, one may venture to
say that LUKOIL’s lube business has
reached a new stage in Ukraine, that
of “extensive coverage”.
ZAPOROZHIA
AUTOMOBILE PLANT
Zaporozhia Automobile Plant (ZAZ) celebrated this year the 150th
anniversary of its founding.
This is the only company in Ukraine that offers a full range of
production for passenger vehicles, including presswork, welding,
painting, body equipments and vehicle assembly. The company’s
production facilities are designed to manufacture 150,000 vehicles per year. The product range includes the ZAZ VIDA, ZAZ
Forza, ZAZ Lanos, ZAZ Sens, and ZAZ Lanos Pickup. According
to preliminary full-year 2013 results, ZAZ is becoming the leader of the Ukrainian auto market. Its market share stands at about
10-11%.
Lanos, Slavuta and Tavria-Pickup vehicles are assembled at a rate
of 32 units per hour. Finished vehicles roll off the assembly line every two minutes for eight hours.
9
PARTNERSHIP
Northern supply lines
LUKOIL began to supply engine and gears oils to service centers of the
major Swedish truck dealer Scania.
N
owadays, LUKOIL’s calling
card in the lubricant business is not only high­quality goods, but
also a growing level of broad services provided to the company’s clients.
Since the beginning of 2013 LUKOIL
has been delivering engine and gear
oils to Lecab Lastbilar AB, a major authorized Scania truck dealer. It’s not
easy to win the trust of clients with
a new lubricant brand in the highly
competitive and mature Scandinavian
market, especially since the leading
majors have operated there for a long
time.
However, thanks to a comprehensive approach to product supplies
that hinges on the Tank Monitoring
System (TMS), long experience and
local knowledge, LLE recently signed
an agreement with Lecab Lastbilars
all service facilities in central Sweden.
The added value service involves
making uninterrupted supplies of oil
using advanced online technology to
monitor the volume in the tanks.
SANNA NILSSON, LEE LOGISTIC &
FULFILMENT MANAGER IN STOCKHOLM
10
As opposed to the classical ‘customer-­
supplier’ approach, the TMS system
allows the supplier to monitor the entire process independently and in real time without involving the customer.
The system is quite simple and runs as
follows: specially designed sensors in
the tanks read the actual level of oil.
The data is automatically relayed to
the coordination center in LLE’s office
in Stockholm, where logistics experts
plan distribution routes with several
small orders (1000 liters and above)
into the same truck. The truck can
load up to ten different products onto the same truck and depending on
the amount of orders per products the
truck could have a distribution round
of up to ten different customers.
That is why this type of distribution
is called Small Drops Deliveries,
Sanna Nilsson LLE logistics and fulfilment manager in Stockholm explained, who went on to say that
rolling several orders into a single
compartment makes it also possible
to minimize shortfalls in case consumers boost their consumption on
an interim basis.
The advantage of the TMS is that we
have full supervision over volumes and
we can place orders whenever we
think it’s necessary. This gives us the
opportunity to route various client orders through a single truck and cut our
shipping costs. Furthermore, in cases
where we might have some oil left on
the truck, the Left On Boards (LOB),
can be delivered to another customer
which is equipped with a TMS, since,
under the terms of the agreement with
TMS customers, LUKOIL can choose at
its discretion where and what amount
of product is to be delivered. The only
requirement set in stone is that the client’s tanks must never be empty!
– The client never has to worry about
whether he has ordered oil, since we
constantly monitor tank reserves and
we deliver the product as and when
needed. As a result, the entire process
runs smoothly, Sanna Nilsson pointed
out. The client can spend its precious
time on other issues and make its operations even more efficient, whereas
we can improve our cost efficiency.
Needless to say, this is a win/win situation for both sides.
LUKOIL’S PARTNERSHIP
WITH LECAB
One of the largest Scania truck dealers in Sweden, Lecab Lastbilar AB
has service centers in Arvika, Karlstad, Kristineham and Sunne, which
provide comprehensive sales, warranty and repair for Scania trucks.
Lecab Bil AB is part of the Lecab group, with a headcount numbering 170. The group’s annual turnover amounts to 700 million Swedish
crowns (80.7 million euro). LUKOIL’s partnership with LECAB started in 2011 when engine oils for passenger cars were dispatched to
workshops of Lecab Bil AB, the sister company of Lecab Lastbilar,
which services passenger cars by leading global producers as Audi,
Volkswagen, SEAT, Skoda.
OSCAR SVEDLUND,
CEO AT LECAB LASTBILAR AB
Deputy head of LUKOIL Lubricants
Europe Alexey Moskalenko said that
this service quickly gained popularity
among Swedish oil consumers.
– Filling products are quite popular in Sweden, Moskalenko says.
Furthermore, such a business model releases the client from the need
to monitor residual amounts of oil in
tanks, as we ourselves handle this task.
According to chief executive director
of Lecab Lastbilar Oscar Svedlund,
the company has made concerted ef-
forts to become Scania’s best dealer in
Sweden and the selection of the oil supplier is a pivotal factor in this context.
– “We have very clear recommendations about cars and trucks from
Scania and other manufacturers about
what actions should be taken during certain service intervals and what
quality of lubricants should be used.
These requirements are the reason
why we now use only LUKOIL products. We chose this company because
it provides us with consistently topnotch goods. Our clients and partners
require high­quality oil and LUKOIL’s
products meet these requirements”,
Oscar Svedlund notes. Another posi-
tive factor cited by Oscar Svedlund is
the proximity of LUKOIL dealers. “They
are always nearby and we can turn to
them if necessary”, the manager said.
Nowadays, LUKOIL supplies 26
points across Scandinavia located in
Sweden and Denmark using the TMS
system. Under the recently signed
agreement with local public transport
company Keolis Sverige AB and the
Kuusakoski recycling company, nearly 40 new supply points will be made
in the first quarter of 2014. The more
customers that we can contract to the
TMS system the more cost effective
our supplies will become in the future,
Sanna Nilsson explained.
11
PARTNERSHIP
LUKOIL lubricants in Georgia
Even though LUKOIL lubricants made their appearance on the Georgian
market quite recently, they have already managed to earn the trust of local consumers. Admittedly, motorists cautiously greeted the new product
in keeping with the stereotype: “Russian brands are for Russian cars and
used foreign ones”. Incidentally, this stereotype was quickly shattered by
the course of actual events. The operating practice of LUKOIL lubricants
confirmed their high quality. And a broad range of products strengthened
the case for buying these Russian products.
T
«AUTO BILD» №50 (WWW.AUTOBILD.GE)
12
hanks to the optimal relationship between price and
quality, LUKOIL products have won
acclaim in many segments of the
Georgian lubricants market. These
include consumer oils and lubricants
for commercial transport, and industrial lubricants. And in the case
of Georgia, the B2G segment (state
procurements), where LUKOIL lubricants have already made strong inroads, deserves special note.
At the end of August 2013 LUKOIL
GENESIS automotive lubricants
won a tender held by the Ministry
of Internal Affairs of Georgia. It
should be noted that the quality requirements for products offered by
the contenders were extremely strict,
thus making the victory of LUKOIL lubricants all the more sensational. As
a result of the tender, the entire fleet
of vehicles of the Ministry of Internal
Affairs of Georgia, including new
patrol cars (Skoda and Toyota), will
be using LUKOIL lubricants.
LUKOIL GENESIS engine oils are
a family of fully synthetic oils, representing the result of cutting-edge
technological achievements and R&D
results by an international team of scientists and engineers in partnership
with British Infineum – a global additive leader. The formulas offered to
Europeans in the selection of a thickening agent were geared towards the
capability of operating the new oil in
extreme conditions, with temperatures ranging from –30 to +30° C).
Deputy General Director for
Commercial
Issues
ALEXEY
STRELCHENKO, who was on a
working visit in Tblisi on October
23, 2013, talks about plans to
promote LUKOIL’s lubricants on
the Georgian market.
What was the purpose of your recent
visit?
Alexey Strelchenko | For LUKOIL the
Caucasus has historically been one
of our key areas. The company carefully monitors the promotion of our lubricants in this region. Nowadays, in
post-Soviet space, Georgia is a country where transformations are most
obvious. Georgia has been expanding at a rapid pace, its vehicle fleet is
undergoing changes and consumers
have the chance to choose. We have
been trying to attract clients by offering them only top quality products.
Our calling card is also top-notch service.
This was hardly the first visit. My colleagues and I travel to this country
on a regular basis to test the waters, i.e. to check whether we’re on
the right track. However, the main
reason for my most recent visit was
an event, which, without exaggeration, may be viewed as a milestone.
The Ministry of Internal Affairs of
Georgia chose to use LUKOIL lubri-
AS A RESULT OF THE TENDER, THE ENTIRE FLEET OF VEHICLES OF THE MINISTRY OF INTERNAL
AFFAIRS OF GEORGIA WILL BE USING LUKOIL LUBRICANTS
cants. It was gratifying to know that
the main factor was not the price,
but rather the quality of our goods.
In this way, the company managed
to strengthen its position on the lubricants market in this region and it
now has excellent prospects.
What are LUKOIL’s main advantages
compared to its other prominent rivals?
A.S. | LUKOIL is one of the few companies represented in Georgia that
runs an entire production chain, ranging from oil production to sales to lubricants to end consumers. Therefore,
LUKOIL is able to guarantee the quality of its goods, including base and
ready-to-use oils.
European countries are the main sales
market for LUKOIL GENESIS engine
oils. Georgia became one of the first
non-European countries that had the
opportunity to use this product. What
do you think was the motivation behind this decision?
A.S. | LUKOIL GENESIS is exported to Scandinavian countries, for
example to Finland. Let me remind
you that this is a cold region where
high-performance lubricants need
to be used: our oil does not freeze
in winter and does not overheat in
summer, that is, it retains its qualities both in cold and heat. As for
the Georgian market, in our opinion
these lubricants fully meet the standards of the police service, which frequently involve extreme conditions
when it comes to engine operations.
At a later time, LUKOIL GENESIS is
expected to be used at authorized
service centers for auto warranty operations.
What are your expectations as far
as sales of products on the Georgian
market are concerned?
A.S. | We are pinning high hopes on
the Georgian market and expect to
see strong expansion. I regret to say
that there are a lot of fraudulent products on this market as dishonest vendors pass them off as genuine. We’re
working on this issue though, and
LUKOIL has an official distributor,
LUKOIL GEORGIA. We now have
a dealer which, figuratively speaking, knows the background of every
single can that ends up in the retail
trade network. In other words, consumers who buy LUKOIL lubricants
can now be confident that they have
purchased the original and top-quality product which has passed the most
rigorous testing.
13
PARTNERSHIP
LUKOIL lubes for key clients
in Romania and Macedonia
During the second half of 2013 LUKOIL won tenders to supply lubricants to
a number of key enterprises in Romania. The company’s partners now include state-owned ROMGAZ (an upstream monopoly holder in Romania),
national energy company Complexul Energetic Hunedoara, aviation company AEROSERV and the Ministry of Defence of Romania. LUKOIL also has
some achievements in Macedonia: since July the company has supplied
lubricants to rescue and water supply units and also to the municipality of
Skopje, which is the capital of the country.
L
UKOIL has operated in
Romania since 1998 and is
the largest Russian fuel and energy company on the Romanian market. The fiscal contributions of LUKOIL
Group account for about 4% of the
country’s total budget revenue. In addition, the company has created over
4,000 local jobs.
Lubricants are produced on the location of S.C. PETROTEL­LUKOIL S.A refinery, at the blending plant of S.C.
LUKOIL LUBRICANTS EAST EUROPE
S.R.L. (LLEE), which is the leader
among LLK­International’s subsidiaries (a wholly­owned subsidiary of
OAO LUKOIL, which is in charge of
lubricants development in Russia and
abroad) in terms of the range of last­
generation goods supplied for production. The bulk of these products
are high ­performance fully synthetic
lubricants.
A high degree of trust in the quality of LUKOIL’s products has enabled LLEE to expand rapidly on the
Romanian market of lubricants. LLEE’s
greatest success, without exaggera-
tion, came when it was contracted to
supply LUKOIL GENESIS Premium
5W40, LUKOIL AVANTGARDE
PROFESSIONAL LS 10W40 and
LUKOIL ATF Dexron III to the
ROMGAZ
group of companies.
Notably, this company is already
LUKOIL’s partner in an upstream project aimed at developing two blocks in
the Romanian sector of the Black Sea
(Est Rapsodia and Trident).
– “Winning the tender was very important for us, since over last years the
key supplier of lubricants to ROMGAZ
has been Hungarian MOL, which
used to cover up to 90% of consumption. However, we managed to turn
this situation around, and this year
LUKOIL became one of the most important suppliers to ROMGAZ, since
we have won a substantial amount of
lubricants to be delivered in 20132015. We expect to increase our
share of delivered goods in 2014”.
An equally important victory on the
Romanian market may be considered
a contract to supply 70% of the total oil
consumption of Complexul Energetic
Hunedoara, the national energy company. About 30 tons of hydraulic oil
HLP and engine oils will be dispatched
to this company. Customers’ portfolio of LUKOIL LUBRICANTS EAST
EUROPE also includes Romania’s
THIS YEAR LUKOIL’S SHARE OF PRODUCTS TO
SOME ROMGAZ COMPANIES EXCEEDED 60%
14
International Airport "Delta Dunarii" in
the city of Tulcea, where LUKOIL MS-­
20 oil will be used in Cessna­172 and
An­2 propellor­driven aircraft. The project become possible due to victory in
a tender announced by AEROSERV
aviation company, which specializes in the provision of aviation services
for touristic and agricultural purposes,
and also performs meteorological research. It is also noteworthy that these
lubricants will be supplied also to state
enterprise BULGARTRANSGAZ (the
respective tender was won thanks to
collaboration with LUKOIL Bulgaria.
LUKOIL’S CLIENTS ALSO INCLUDE ROMANIA’S INTERNATIONAL AIRPORT IN THE CITY OF TULCHE,
WHERE LUKOIL MS-20 OIL WILL BE USED IN THE CESSNA-172 AND AN-2 PROPELLOR-DRIVEN AIRCRAFT
Nowadays, the capacities of the blending plant in Romania make it possible to
produce lubricants that are supplied far
beyond the borders of this country. The
volume of different kind of lubes produced from ready­made components at
the production facility in Romania stood
at 17,000 tons at the end of 2012.
Romanian products can be found on the
shelves of LUKOIL’s branded filling stations in Central and Eastern Europe.
Since the summer of 2013 LUKOIL has also partnered with
a number of companies in the Republic of Macedonia.
It should be noted that under the import replacement program, regular
supplies of branded lubes have started to be made to subsidiaries of TMK
(Russia) in the territory of Romania,
i.e. TMK ARTROM and TMK RESITA
(the annual consumption volume of
these companies amounts to about
50 tons).
In 2013 LLEE strengthened its positions as a supplier of lubricants to
Romanian railroads. Compared to
2012, supplied volumes increased
by 10% this year and reached over
900 tons. And finally, since the beginning of 2013 LLEE has been the official lubricants supplier for a number
of entities affiliated with the Ministry of
Defence of Romania.
Since the summer of 2013 LUKOIL
LUBRICANTS EAST EUROPE has also partnered with a number of companies in the Republic of Macedonia.
LUKOIL GENESIS PREMIUM 5W40
and LUKOIL ATF gear oil will be supplied to rescue units and to the municipality of Skopje, the capital of
Macedonia after LUKOIL Macedonia
won an engine and transmission oils
tender. LUKOIL AVANTGARDE and
LUKOIL AVANTGARDE ULTRA- diesel engine oils and LUKOIL GEYSER
ST 46- hydraulic oil will be poured into the vehicles of the city’s water supply unit.
This year has seen an increase in the
range of small and medium packed
lubes supplied under a contract
LLEE SALES AND MARKETING DIRECTOR
VIKTOR TITOV: "OUR GREATEST SUCCESS
WITHOUT EXAGGERATION, CAME
WHEN IT WAS CONTRACTED TO SUPPLY
LUKOIL GENESIS PREMIUM 5W40, LUKOIL
AVANTGARDE PROFESSIONAL LS 10W40 AND
LUKOIL ATF DEXRON III ENGINE OILS TO THE
ROMGAZ GROUP"
with international car manufacturer
DACIA GROUPE RENAULT for its
branded service under the Motrio
brand. And finally, initial success has
been achieved in the sales channel
of branded service centers, as systematic supplies got under way to
a SCANIA and MB dealer – Euxin
Trucks.
15
PARTNERSHIP
LUKOIL starts producing
lubes in Austria
At the end of June 2013 LUKOIL and Austrian OMV Refining & Marketing
GmbH signed an agreement under which LLK-International (a whollyowned subsidiary of LUKOIL) acquired OMV’s oil mixing plant with a capacity of 35,000 tons per year located in the suburbs of Vienna. This strategy is in line with the company’s strategy to promote LUKOIL’s lubricant
business in the global market.
O
MV’s plan, which is located in a suburban area of
Vienna (founded in 1996) specializes in the production of lubricants:
industrial and engine oils marketed
under the BIXXOL brand. The plant’s
products are sold not only in Europe
but also in several Asian countries
(including Pakistan, Jordan and
Thailand). These production facilities
will now start to launch high-performance premium products under the
LUKOIL brand that will be available
to European consumers.
– A convenient geographical position in relation to foreign automakers and industrial enterprises, a
smoothly running distribution system
in Europe, advanced production fa-
16
cilities, unique R&D experience and
vast professional expertise of the
company’s employees are the key
factors which influenced our decision
[to purchase this asset], said LUKOIL
president Vagit Alekperov in an official press release.
LUKOIL had sought for several years
a suitable asset in Western Europe
to strengthen its positions in the lubricant business in this area. “We carefully and cautiously considered the
investment issues. After having studied a number of options we definitely
found a top-notch and unique production asset with a distribution system already up and running in Europe”, said
Maxim Donde, general director of
LLK-International. OMV has product
distribution outfits located in Austria,
Bulgaria,
Hungary,
Germany,
Romania, Slovenia, Slovakia, the
Czech Republic and Serbia.
The deal will allow LUKOIL to achieve
three key goals. First of all, it will yield
synergies with LLK-International’s factories in Romania and Finland, in the
second place it will streamline the logistics of lubricant supply to the company’s strategic partners, and, in
third place it will strengthen LUKOIL’s
potential to develop new oils (the
Austrian plant currently produces
1,400 branded products).
– “For OMV, this deal, in turn, represents another step on the road to
enhancing the company’s strategy,
which calls for judicious use of our
downstream and marketing assets”,
noted Manfred Leitner, a member of
OMV’s board of directors who is in
charge of downstream and marketing
issues.
Human resources are an equally important asset. “We attach great value to the expertise of our employees
as we count on their skills and experience. Through our joint efforts we
will be able to improve LUKOIL’s lubricant business in Western Europe”,
noted Maxim Donde. After the official announcement was made about
the deal between OMV and LUKOIL
to sell the plant, the LLK management
sent a delegation to visit the office of
the Austrian company in Vienna. As
part of the visit, a corporate presentation on LUKOIL’s social responsibility was delivered to the Austrian
colleagues as well as the Russian
company’s lubricant development
strategy.
– The personnel and management
of OMV unanimously applauded the
presentation of LLK’s top managers,
noting not only its professional preparation and the manner of its delivery
but also giving an upbeat assessment
of its program of social responsibility, the company’s position on this issue and the content of the program
per se is very convincing, according
to OMV’s chief communications manager of Refining & Marketing Philipp
Strommer.
Needless to say, the employees of
the Austrian company are mostly
interested in the employment prospects and keeping their jobs during
this difficult time for the European
economy.
– The key decisions regarding the life
of the company give rise to such issues, and this should come as no surprise, Philipp Strommer explained. All
parties involved in the process have
attempted not only to come up with
fair personnel solutions, but also to
use straight and transparent talk in the
early stage of resolving this issue. The
presentation by LLK’s top managers
made it possible both for the company’s business as a whole and its employees to gain a confident vision of
the future.
A REGIONAL LEADER
– ОMV is a regional leader in
Central Europe. Shareholder
capital is divided as follows:
International Petroleum Investment
Company (Abu Dhabi) holds 24%,
Österreichische Luftverkehrs AG
(Austroflug) has 31.5% and the
other 43.6% is in free float. The
companies listed on OMV’s balance sheet include an upstream division (2/3 of upstream oil and gas
projects are concentrated in Austria and Romania), downstream and
marketing (the total number of the company’s filling station chain reached
4,400 by the end of last year), as well as Gas & Power GmbH (a pipeline operator which ships about one third of the total volume of Russian
gas exports to Western Europe) and OMV Deutschland (a wholly-owned
company which enabled OMV to gain market leadership in southern
Germany). The company also owns a 97% stake in Petrol Ofisi (a leader
of the Turkish market for production of lubricants; the company owns a
factory capable of producing about 55,000 tons of lubricants per year),
a 36% stake in Borealis (Europe’s second-biggest manufacturer of polypropylene and polyethylene) and a controlling interest in Petrom (the
largest oil company in Romania).
17
PARTNERSHIP
Road to China
The World Touring Car Championship (WTCC) is one the most important global events in the world for racing car drivers. The stages of this
competition are held in 11 countries on four continents. The next-tolast leg of WTCC-2013 took place in Shanghai on November 2-3.
The final round, which traditionally runs in the Chinese city of Macao,
was held on the streets of that city on November 16-18. The LUKOIL
RacingTeam, which customarily takes part in this event, is the only
Russian team on the circuit. This driver of this team won the individual classification of the championship for the third consecutive year –
Ivan Muller.
Incidentally, one stage of the
WTCC took place for the first
time in the capital of Russia.
Russia will be back on the
calendar in 2014, which
means we’ll be able to watch
this amazing event again in
June.
18
The WTCC championship will be
broadcast by Eurosport, a major
television channel, with over 500
million global viewers. This alone
makes WTCC a unique marketing tool. In line with LUKOIL’s lubricant promotion strategy for the
promising Chinese market, LLKInternational has decided to use
the championship to launch a big
marketing campaign. As part of
the event in Shanghai the official
Chinese dealer of LUKOIL lubes was
awarded a dealer certificate during an official ceremony. After that,
LLK-International’s representative
Andrey Savin and General Director
of the company/dealer for China
Van Shaoguan answered questions
asked by journalists in attendance.
This exciting event received wide
coverage in the Chinese media,
helping to boost brand awareness
in the country.
19
NEWS
www.lukoil-masla.ru
LLE signed a contract
with KEOLIS Sverige AB
After 2 months of running successfully field tests of 15,000 kilometres with
Lukoil products and 10 months of negotiating the details in a partnership, LUKOIL
Lubricants Europe OY signed a contract
with one of Sweden’s biggest public
transport company’s; KEOLIS Sverige
AB. In the roll-out plan the company started supplying the busses in Stockholm in
January 2014. In February the company roll out the distribution in Gothenburg
which is the second largest city in
Sweden. Keolis has a total of 1,900
busses in Sweden, of which 1,100 in
Stockholm. The approximate volume of
supplies is expected to be 500 cubic
meters, of which LUKOIL AVANTGARDE
PROFESSIONAL LS 10W 40 and
AVANTGARDE PROFESSIONAL LA
15w 40 will account for the biggest
amounts. The vehicle park of Keoils consists of many brands of buses which operate using a number of different fuels.
«With Lukoil's combined specifications
per product we have been able to decrease the number of different lubricant
products and made it both easier and
cheaper for customers in their workshop, but it also optimizes our logistics»,explains Sanna Nilsson, Logistic and
Fulfillment Manager of Lukoil Lubricants
Europe Swedish branch.
New-style dealer conference
A dealer conference of LUKOIL
LUBRICANTS EAST EUROPE (LLEE)
was held last year in the Romanian city
of Predeal. The conference was attended for the first time not only by current
20
members of the dealer/distributors network, but also by potential clients that
are Romanian companies. A special time
of the conference schedule involved the
presence of companies from the FMCG
sector, which was greeted as a welcome
addition aside from the usual representatives from lubricants and spare parts businesses. Notably, their participation in the
conference was of great strategic importance, since FMCG companies shared
with all participants their best practices and their experience about the way
to activate customers, to attract them to
their point of sales and to obtain repeated buying. Given the expanded lineup of
attendees, great attention was devoted
to the presentation of LLEE, its main business areas and operating principles on
Romanian lubricants market. Companies
that already work with LLEE also had a
busy agenda. They were especially interested to hear about the company’s
new strategy for Romania in 2014. The
highlight of the event was a special video
which showed how lubricants are manufactured at the blending plant in Ploiesti.
Starting next year dealers’ sales targets
will be built on the recent segmentation
of the Romanian market based on sales
channels. Underlying the strategy are the
existing volumes of the markets in the various regions of the country and their areas
of specialization. “This kind of approach
will make possible to monitor sales of
products and gain a better understanding
of the market”, Viktor Titov summed up.
LUKOIL’s base oils
showcased in Budapest
Last year LLK International participated
in the conference ACI’s European Base
Oil and Lubricants Summit 2013, which
was held in Budapest and brings together producers of lubricants and additives, OEM representatives and service
providers from over 100 companies.
LLK-International adopted a decision to
hold a one-day workshop as part of the
conference. Speakers at the workshop
included Alexey Strelchenko, Andrey
Yasnovsky and Vsevolod Shirinkin. The
success of the event is already apparent, since numerous requests have been
received from potential buyers, while
preparations have been made, samples of base oils have been dispatched
and deals on trial deliveries have been
discussed before the end of the year.
Furthermore, a contract was signed with
Infinity Oil AG to supply base oils to
countries of Eastern Europe. Shipments
under this contract are scheduled to begin at the beginning of December 2013.
LUKOIL’s blending plant
in Romania produced bottle
no. 10 million of lubricants
In September, 2013 LUKOIL’s blending plant in Ploiesti produced bottle no. 10 million of lubricants. That
means this bottle of 1 liter, LUKOIL
GENESIS PREMIUM 5W-30, on production and packing lines of LUKOIL
LUBRICANTS EAST EUROPE was produced this bottle in branded, small
pack (1,4,5 liter bottles) ranges of lubricants. The counting of the production in small pack started in October
2008 when, at the blending plant,
were introduced, fabricated and delivered new designed bottles in 1, 4
and 5 liters filled in with different ranges of lubricants and transmission fluids.
2013 year results were
summed up at LLK
International amid
a festive atmosphere