Gazprom Neft planning to buy lubricants plant in Finland or Baltics
VENICE, Italy. March 18 (Interfax) - Gazprom Neft is planning to buy a lubricants plant in Finland or the Baltics, General Director of Gazprom Neft Lubricants Alexander Trukhan told reporters.
"The Northern European market is very promising for us. Right now we are supplying small batches there from a plant in Bari, Italy. But it would be more logical to reduce the logistics and have our own plant, for example, in Finland, Estonia or Latvia. Right now we are holding negotiations with three plants. We plan to start with processing and later buy if we are convinced of the project's effectiveness," he said.
Gazprom Neft is eyeing lubricant plants not far from the border with Russia and capable of producing at least 30,000 tonnes of product a year.
"Given the fact that the construction of a new lubricants plant in Europe with such a capacity would cost approximately $40-$50 million, we'll take that price as a benchmark," Trukhan said.
The company currently delivers 12,000-20,000 tonnes of lubricants to Northern Europe, but it expects to seriously ramp up its presence in the region, he said.
However, Gazprom Neft's overseas lubricants business is negatively impacted by the 60/66 tax system, under which export duties for lubricants are equal to those for dark petroleum products.
"However, lubricants are a high-tech product and not a raw material. Higher costs are involved in producing lubricants," Trukhan said.
Together with other interested oil companies, Gazprom Neft is in talks with the Russian Energy and Finance Ministries on settling this situation.
"We really hope to find an agreement on this issue," he said.
The business of domestic lubricant producers "is in a deplorable state," Trukhan said. "And this despite the fact that the Russian lubricant market as a whole is growing because of imports and the development of the business of large overseas players here," he said.
Because of the 60/66 system, at this point Gazprom Neft is rejecting the idea of entering the lubricant market in China.
"We are very interested in the program to develop the northern territories of China. We took lubricants there through Kazakhstan, but because of the export duty, we closed that direction," Trukhan said.
