Production and sale of oils and lubricants

The Company devotes special attention to the production and sale of oils and lubricants. The importance of the sale and production of lubricants for Gazprom Neft is underscored by the existence of a separate vertically integrated oil company — LLC Gazpromneft-Lubricants.

In 2014, LLC Gazpromneft-Lubricants supplied:

5,200  t
of turbine oil

1,200  t
of a wide range of premium oils

LLC Gazpromneft-Lubricants sells its products using the Gazpromneft filling station network and also supplies products to retail chains, online stores, service stations and the assembly lines of automotive manufacturers. LLC Gazpromneft-Lubricants sells its products both in Russia and abroad.

The Company is certified under the integrated management system in accordance with the requirements of international standards ISO 9001:2008, 14001:2004 and OHSAS 18001:2007. In 2014, the certification process was completed to meet the requirements of ­ ISO/TS 16949 for suppliers of components to assembly lines of automotive manufacturers.

The commissioning of the new super modern production facility at the Omsk Lubricants Plant will enable Gazprom Neft to produce high-tech motor oil in Russia that is highly competitive with its Western analogues in terms of features and provide Russian consumers with products of the highest quality. We applied the experience we have accumulated in the process of managing foreign assets at the new Russian site. The next major project, which is planned for implementation at Omsk Lubricants Plant in 2018, is the start of the production of ultra-pure base oils. This will give us the opportunity to move away from raw material imports for the production of high-tech oils by strengthening our competitive positions in Russia and CIS countries.

Anatoly Cherner Deputy CEO of OJSC Gazprom Neft for logistics, refining and sales

Performance results in 2014

In 2014, LLC Gazpromneft-Lubricants updated its long-term business development strategy to 2025.

The Company has set a goal to establish an international lubricants company that is a recognised leader in the production of high-tech premium oils, lubricants and technical fluids under a global brand. As part of realising this goal, the Company plans to expand the range of modern premium products by 2025 as well as to increase its share of the Russian market and conduct further expansion on foreign markets.

LLC Gazpromneft-Lubricants increased premium sales by 11% in the reporting year compared with 2013, while growth in the G-Family brand totalled 17% despite a stagnating market and increased competition. Compared with 2013, the share of LLC Gazpromneft-Lubricants share on the Russian retail oils market increased by 1.1 percentage point to 13.6%. Total product sales by LLC Gazpromneft-Lubricants came to 475,000 tonnes in 2014, down by 3% from 2013 due to scheduled repairs at the Omsk Lubricants Plant and YANOS.

Regions of operation

LLC Gazpromneft-Lubricants has production assets in Western Siberia (Omsk), the European part of Russia (Yaroslavl), the Moscow region (Fryazino) as well as Western Europe — in Italy (Bari) and Serbia (Novi Sad).

Premium sales of oils and lubricants, mn t

Two important achievements of the reporting year was the completion of the construction and commissioning of an automated oil mixing station at the Omsk Lubricants Plant with the capacity of 180,000 tonnes per year and the opening of a new lubricants production facility with the a capacity of 5,000 tonnes per year. An automated oil bottling line was also installed in the reporting year on the Mercedes Benz Trucks Vostok assembly line with full coverage of production needs in terms of variety and volume.

LLC Gazpromneft-Lubricants continued expansion on international markets in 2014 by broadening the foreign geography of lubricant sales. The number of foreign markets grew to 52 countries, including such new countries as Romania, Hungary, Taiwan, Egypt, Lebanon, Libya, Syria, Guyana, Israel, Bangladesh and Ghana, among others. Sales of premium products on foreign markets increased by 36% in 2013.

In 2014, the Company met 100% of the Gazprom Group’s needs for turbine oil and supplied 5,200 tonnes of turbine oil and an additional 1,200 tonnes of a wide range of premium oils, up 30% from 2013.

The Company continued to expand premium sales channels in the reporting year. Gazprom Neft began implementing the G-Energy Service international programme to develop independent service stations.

Nine branded G-Energy Service SSs were opened in 2014, four in Russia, three in Italy and one each in Georgia and Belarus.

As part of the Sochi–2014 International Investment Forum, strategic partnership agreements were signed with Rostselmash for supplies of ROSTSELMASH G-PROFI oils and with CJSC Siberian Business Union Holding Company. Agreements on marine oil supplies were concluded with major companies including: FSUE Rosmorport and Rosnefteflot, part of Sovcomflot. A contract was signed with John Deere Forester, a major supplier of logging equipment, for supply of premium products to 20 branches in Russia. Supply of premium products continued to key Russian industrial enterprises, including OJSC Severstal, OJSC CMP, OJSC KAMAZ, OJSC MMK, ILIM, SUEK as well as to enterprises of the Mechel Group — OJSC Yakutugol Holding Company and OJSC Southern Kuzbass.

In 2014, a nationwide advertising campaign including television, outdoor advertising, print and internet was conducted for the Gazpromneft oil brand in addition to the nationwide promotions “Your Victory Oil” and G-Club, which aim to stimulate demand for G-Energy products at 3,000 retail outlets and service stations.