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Lubricants

LUKOIL markets oils and lubricants in over 100 countries and its production facilities include seven own sites, two joint ventures and 24 contracted plants. Russian assets comprise full cycle production facilities at the Perm and Volgograd Refineries, a lubricant blending plant in Tyumen and INTESMO joint venture producing lubricants in Volgograd. LUKOIL's overseas production assets include own plants in Romania, Finland, Turkey and Austria, as well as LLK-NAFTAN in Belarus, a joint venture producing additives. 

In 2016, total lubricant production increased by 11% to 1,035 thousand tonnes, and sales of LUKOIL-branded premium motor and industrial oils were up 22.4%. Production and distribution growth was driven, among other factors, by the actively implemented import substitution program and a favorable market environment.

One of the key goals in development of this business is to create a product mix that would meet the current requirements; over the last five years the product mix has been significantly expanded from 230 to 400 brands. Fifty-two new kinds of lubricants were engineered in 2015, and formulations of 57 products were revised.

In 2016, we developed 50 new lubricant grades and changed the formula of 60 products; the product mix was expanded to 700 items. LUKOIL started producing a fundamentally new type of products – premium lubricating coolants for the metal processing industry.

In 2016, LUKOIL launched the construction of a lubricants plant in Kazakhstan the capacity of 100 thousand tonnes per year to be engaged in blended lubricant production. The plant is scheduled for commissioning in 2018.

In 2016, LUKOIL became the largest Russian supplier of first fill lubricants to car manufacturers in Russia and Europe. New consumers of LUKOIL lubricants include Ford, Volkswagen and Lifan factories. We also continued to collaborate with RenaultNissan, GM, Chery, MAN, GAZ and KAMAZ.

The Company places a strong emphasis on developing partnerships with authorized service stations, which are key drivers of future demand for lubricants. In 2016, supplies to authorized service stations increased by more than 60%. The Company's customer base doubled. Landmark contracts were signed with new partners: DAIMLER KAMAZ RUS LLC, Klyuchavto Group, PANAVTO LLC, AGAT Group and Hino Motors Sales LLC.

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