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Naftan to upgrade base oil production at its refinery in Novopolotsk


Naftan to upgrade base oil production at its refinery in Novopolotsk

Naftan wants to upgrade base oil production at its refinery in Novopolotsk, Belarus, by increasing output of API Group III stocks by 2026, according to a recent letter sent to clients. Source: Lubes'n'Greases

Obtained by Lube Report, the letter does not indicate the amount of Group III capacity that the company wants to add or how much it intends to spend. The company said the project is not yet approved by Naftan’s top management and that it does not commit to a timeline for its completion.

We would like to inform you that Naftan is working on a strategy for development of its base oil unit that envisions realization of a large investment project.

the company said in the letter dated Jan. 4, 2021

Naftan added that the project would allow the company to produce 4, 6 and 8 centiStoke Group III oils “with quality similar to that of the leading European producers.”

The company also announced that it has improved the quality of two existing Group I oils – its solvent neutral 500 and its BS-140 bright stock. At the moment, Naftan’s refinery in Novopolotsk has capacity to produce 198,000 tons per year of Group I base oil and a minuscule amount of Group III base oil.

Refinery capital investments in Russia and other ex-Soviet states often take much longer to complete than similar projects in other developed regions. A few projects completed in recent years by marketers such as Slavneft and Tatneft were delayed by years while companies such as Lukoil and Rosneft are still working on projects that have been postponed several times.

An industry insider told Lube Report that this is due to a number of factors refiners face, such as bureaucratic hurdles, as a number of Russian oil majors are state-owned. So they tend to focus on crude oil exports and fuel production instead.

“Russia is dependent on foreign technologies in oil refining, including the production of Group II and Group III base oils, said Denis Varaksin, executive manager in Dym Resources, a Berlin-based oil trader. “To import technologies in a relatively closed economy is a slow process.”

According to Varaksin, another reason is that crude oil export remains the most profitable business for oil majors in Russia, Belarus and other ex-Soviet states.

Government-driven refinery modernization programs are focused on increased gasoline, diesel and jet fuels production, but not on base oil quality improvement.

Denis Varaksin, Executive Manager, Dym Resources

He said that Naftan’s letter is a good sign though, because any “move into quality base oils is long awaited” in Eastern Europe. “Demand for Group III base oils is growing every year while Europe, Russia and the rest of the world is switching from mineral Group I base oils to semi-synthetic and synthetic base oils.”

Dym found that global Group III base oil demand was growing at pace of 3%-6% annually from 2016 onwards, “which resulted in a heavy deficit of VHVI-4, VHVI-6 and VHVI-8 base oils in the market in the second half of 2020 and beginning of 2021.” VHVI-4, VHVI-6 and VHVI-8 are terms for viscosity grades that are close to equivalent to 4, 6 and 8 cSt, respectively.

Demand growth may increase further, as more countries implement stricter emissions laws in order to reach fuel efficiency and lubricant durability.

Denis Varaksin, Executive Manager, Dym Resources

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