Publication of LUKOIL Lubricants Company June 2013 (LLK-International) LLK-International is developing well in Russia and abroad, having opened an office in Kazakhstan this year and continuing to expand its presence in the European market. LUKOIL lubricants are the only goods sold in retail stores. As an efficient company, we retain leadership, while intensifying our efforts to upgrade LUKOIL plants. As a result, nowadays all our refineries are unique facilities and we manufacture the best products in Russia… LUKOIL President Vagit Alekperov CONTENTS 2 CORPORATE AFFAIRS LUKOIL’s Lubricants Business: Results and Perspectives 2 5 PRODUCT LUKOIL GENESIS: A Premium Product from Finland 7 PARTNERSHIP LUKOIL GENESIS Engine Oil: New Premium Oil for the Clients of Franchised Workshops 9 PARTNERSHIP LUKOIL STEELO 150 Gear Oil Awaited in India and the United States 13 11 CORPORATE AFFAIRS New Victories in the Balkans 13 PARTNERSHIP LUKOIL Gear Oil for HeidelbergCement Plants in Ukraine 14 PRODUCT Alexei Strelchenko: Our Base Oils Enjoy High Reputation 15 15 FORUM ChemCamp – Science and Business Go Hand in Hand 17 CORPORATE AFFAIRS WTCC: LUKOIL GENESIS’ Russian Premiere 19 PARTNERSHIP LUKOIL Launches Production of UZAUTOOIL Oils for Uz-Daewoo 20 NEWS 17 «МАСЛА@ЛУКОЙЛ» #3 June 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: [email protected] Press run: 2 000 экз. The magazine is registered by the Federal Service for Media Law Compliance and Cultural Heritage. Registration certificate ПИ №ФС77-28009 1 LUKOIL’s Lubricants Business: Results and Perspectives CORPORATE AFFAIRS CORPORATE In March 2013, LUKOIL’s First Vice President Vladimir Nekrasov held a meeting that was attended by the management of LLK-International and its subsidiaries, with 2012 performance results and challenges for 2013 on the agenda. Last year’s main achievements include a record high level of profit, and also an absolute all-time high in export sales of packaged goods. Moreover, the Company delivered the largest volume of drum-packaged lubricants to the domestic market in its history. UKOIL’s lubricants business with the Uzbekistan-based General hydraulic oil and LUKOIL STEELO Lcontinues to expand at a rap- Motors Powertrain company, which gear oil. id pace. The volume of investments in manufactures 250,000 engines per Another large Moscow-based con- this business segment is rising stead- year. The company has reached simi- sumer is Mosgortrans, to which ily: according to Vladimir Nekrasov, lar success in Kazakhstan, as LUKOIL LLK will be supplying annual vol- the company’s investments in down- first fill for Chance automobiles made umes of LUKOIL AVANTGARDE stream operations topped $3 bln in on the basis of the Chevrolet Lanos PROFESSIONAL motor oil. 2012. LUKOIL also invested heavily in and agricultural machinery will be Key achievements in operations with the retail sales business in Russia and purchased by AgromashHolding key clients include the commencement abroad. In particular, a number of fill- (Almaty), the leading auto as- of deliveries of diesel locomotive oil to ing station chains were purchased in sembly enterprise in Kazakhstan. Tajik Railways, the approval of the first Ufa, Nizhny Novgorod, the prov- The Company’s new partner in dealer in Mongolia and the continuation ince of Mordovia and the Kursk re- gion, as well as in Belgium and the Netherlands. In 2013, total capital In 2013, total capital expenditure in the downstream sector is expenditure in the downstream sector expected to increase to $3.7 bln is expected to increase to $3.7 bln. PLANS AND ACHIEVEMENTS Uzbekistan is SAMAVTO, and Isuzu of stable deliveries of lubricants in small Operations with key clients remain the bus assembly enterprise, which will and large packages to Afghanistan. This pivotal success factor. To remind, last be purchasing LUKOIL motor oils for year, collaboration with Afghanistan March LLK won a tender for the sup- assembly-line filling. will continue and according to the fore- ply of first-fill motor oil to the Avtotor Another important achievement for the casts of LLK Deputy General Director assembly line (at issue is the supply of Company was its entry into the seg- Alexei Strelchenko, the volume of sup- a premium product LUKOIL GENESIS ment of oil filling at franchised work- plies will amount to about 1,000 tons by FE 5W-30 into Opel and Chevrolet shops. Last year, LLK signed a five- the end of this year. cars which are manufactured at a year partnership agreement with Last year, LLK managed to ramp up Kaliningrad plant). In addition, a SpetsAvtoTsentr Group, under the sales volumes for all types of pack- partnership agreement was signed terms of which the partner will pour aged goods, as sales of lubricants in for the delivery of LUKOIL lubricants LUKOIL GENESIS into Infiniti, Nissan large packages increased by more to Russian dealers of UZ-Daewoo, and Citroen automobile engines. than 10 percent. Sales volumes of which manufactures the Nexia and Last year, LLK continued to collabo- products in medium and small-sized Matiz brands. The Korean auto manu- rate with leading companies in the containers also rose. The sales of car facturer’s dealership network in Russia metallurgical industry after being care chemicals rose by almost 15 numbers 150 companies, while the declared the winner of a tender to percent. The year-end results can be aggregate volume of lubricants con- supply branded LUKOIL lubricants summed up as follows: LLK maintained sumption will be 2,500 tons per year. to Magnitogorsk Metallurgical Plant leadership on the domestic market, A three-year contract for first fill of (MMK). The purpose of the deal marketing about one third of the total LUKOIL lubricants was also signed was the supply of LUKOIL GEYSER volume of lubricants sold in Russia. 2 The production of branded lubri- cants has continued in recent years. One of the most striking illustrations in this regard is the experience of LLK’s Tyumen branch. Over the past four years, the company has steadily raised the proportion of branded oils, which rose during that period from 29 percent in 2008 to 73 percent last year. Furthermore, oil packaging ca- pacities were boosted in Tyumen and a section for blending hydraulic oils was launched, enabling the compa- ny to expand its product mix and in- crease the productivity of oils with a high level of purity. Attached to the Tyumen branch is the only test center in Russia that specializes in lubricants research. Since its inception, the cent- er has developed and reformulated over 150 oils, with most of these op- erating being carried out in the work- shops of this branch. ACCORDING TO LUKOIL FIRST VICE PRESIDENT VLADIMIR NEKRASOV, ERASING BORDERS INVESTMENTS IN THE COMPANY'S DOWNSTREAM BUSINESS TOPPED $3 BLN IN 2012 Meanwhile, the Company has been expanding the footprint of its opera- LLK Ukraine also attained impressive ers Metinvestholding, Zaporozhstal, tions on the global market. According success as the company’s operating DUEK and also ArcelorMittal. to LLK International General Director profit surged, considerably outpacing Alongside this, the company contin- Maxim Donde, LLK in the reporting the plan for sales of branded oils. The ued to ramp up its presence in the re- year “continued to move steadily most dynamic growth was posted in the tail sales segment, supplying prod- towards the realization of one of its segment for passenger transport oils, ucts under direct contracts or through main goals – to rank as one of the top where the volume of LUXE oils soared the dealers of a number of large retail five world leaders in the industry.” by 85 percent over the past year. chain outlets and hypermarkets. Work Nowadays, the Company’s business Major growth in sales volumes were al- continued to develop a dealer network spans nearly all continents (except so recorded in the branded packaged and each one of the company’s six re- for Australia), and LLK’s products are oils segment for industrial consumers. gional dealers reported growth in sales available in 102 countries around the globe. Last year also witnessed strong perfor- LLK maintained leadership on the domestic market, marketing mance on the part of LLK’s subsidiaries about one third of the total volume of lubricants sold in Russia located outside of Russia, as well as those whose activity is geared towards foreign consumers. In the marine oils According to LLK Ukraine Director volumes. Last year was also marked segment, LLK Marine’s business turno- Yaroslav Litvintsev, since last year the by the modernization of the investment ver achieved major expansion. Thanks company has been delivering LUKOIL program in operations with automo- to the company’s entry into the mar- LUXE oils under direct contract to bile service centers: equipment rang- kets of South Korea, Taiwan, Saudi Melitopol Meat-Packing Plant, and es were expanded, new partners were Arabia, India and Bangladesh, the for the first fill into the engine units of attracted and powerful marketing sup- company boosted its sales volumes Forza and Sens automobiles manu- port was carried out, which resulted in by 76.4 percent compared to 2011. factured by Zaporozhsky Auto Plant a 50-percent rise in sales volumes of This growth enabled LUKOIL to raise (ZAZ). A strategic partnership agree- lubricants via franchised workshops. its share on the global market of ma- ment was signed in the commercial Many years of partnership with rine oils to 3 percent. LLK Marine al- transport segment with Chernigov Belarussian colleagues at Naftan so managed to strengthen its positions KAMAZ Center, Ukraine’s main im- (Novopolotsk) last year again also in the most promising segment of large porter of KAMAZ trucks in Ukraine.