Shell Begins Construction of 180,000-Ton Lubricants-Blending Plant in Russia

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Researched by Industrial Info Resources (Sugar Land, Texas)--Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands) has commenced construction of a new lubricants-blending plant in Torzhok, Russia. The plant, which represents the first international oil company construction venture in Russia, will be developed at a cost of $100 million.

Located in Tver, about 230 kilometers northwest of Moscow, the facility will have a production capacity of 180,000 tons per year, equivalent to 200 million liters per year, of lubricant products. The new plant is scheduled to begin commercial production by the end of next year and is expected to reach full production capacity by 2012. The product range will include transport oils, motor oils and industrial-grade lubricants, which initially will be targeted at the reviving Russian lubricant market and other neighboring markets.

This facility will be the largest manufacturing unit of its type in Shell's current global portfolio. The plant's strategic location will enable Shell to provide customers with high-quality products, manufactured using world-class production technologies, with relatively shorter lead times. Proximity to potential markets is expected to reduce delivery time, minimizing customers' requirement to maintain large inventories. Industrial customers in the vicinity will benefit from faster access to bulk consignments, as well as reduced transportation and storage costs.

Russia is the third-largest consumer of lubricants in the world, following the U.S. and China. Shell has been active in Russia for some time, achieving a profitable growth rate for about seven years. Despite the recent recession, which caused the global demand for lubricants to decline about 3%, Shell has managed to record a 6% sales increase in Russia in the past 12 months. With the Russian economy predicted to revive by 2010 and the global lubricant market expected to be restored to 2007 levels by next year, Shell's new venture is likely to be quite profitable in the next few years.

Shell's Torzhok plant has been designed to use state-of-the-art process and organization technologies. In addition to providing advanced lubricant variants, the facility also will create 150 jobs in the Tver region, relying on a Russian workforce for operations across all levels. The regional administration authorities of Tver have committed all possible support to Shell.

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