TORZHOK, Russia (Reuters) - Royal Dutch Shell, which was forced to limit its presence in Russia’s upstream sector because of Western sanctions, has seen its lubricant sales in the country double since 2014, the head of one of its plants there said.
Shell launched its Torzhok lubricants plant in Russia’s northwest in 2012, with the aim of producing up to 200 million liters a year. The factory plans to reach that capacity in 2027, and currently produces around 90 million liters a year.
“Compared to 2014, we have seen our (sales) portfolio almost doubling,” Maxim Solovyov, head of the Torzhok plant, told Reuters in an interview.
Apart from its own lubricants production at Torzhok, Shell imports another 30 million liters per year into Russia from its plants elsewhere to sell them in the region.
After the rouble weakened amid sanctions and lower oil prices three years ago, lubricant production for Shell in Russia became more profitable, Solovyov said, as the company’s global costs are in U.S. dollars.
“Russia is one of our priority (lubricant) markets along with Mexico, China, Indonesia and India. In these countries Shell plans the most rapid growth during the next 10 years,” Solovyov said.
Russia’s once-booming car market was a high-profile victim of the country’s economic downturn but returned to growth last year. The PwC consultancy expects Russian new car sales to grow by 11 percent this year.
The Torzhok plant also sends lubricants to Belarus, Kazakhstan, Uzbekistan and Mongolia, Solovyov said, adding that in 2014, the factory’s sales were almost entirely domestic.
Shell holds a stake in the Sakhalin-2 liquefied natural gas plant in Russia’s far east, the country’s biggest so far, but the shareholders led by Gazprom have been unable to agree on the final terms of an output expansion.
Shell also suspended its shale oil project with Gazprom Neft, Gazprom’s oil unit, after the introduction of sanctions.
Writing by Katya Golubkova; Editing by Dale Hudson