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. Last Updated: 07/27/2016

Chevron Enters Russia's Lubricant Market

U.S. oil major Chevron has expanded its presence on the local market by signing an agreement with lubricants distributor Petrolube, which has started building a dealership network in the European zone of Russia.

"I felt for a long time that we should be in the Moscow market," said Tony Roche, sales manager with Eastern Hemisphere Lubricants.

Eastern Hemisphere Lubricants is a British-based subsidiary of Chevron Corp. formed in 1997 to market lubrication products and services in the former Soviet Union and Eastern Europe.

Chevron first tapped the Russian oil-products market through an agreement with Vladivostok-based Automative Accessories in September 1999.

It is now expanding in the European part of Russia, trying to catch up with other global oil players — Shell, Mobil and BP — that established their local presence in the mid-'90s.

Roche said Chevron’s choice of Vladivostok as a foothold was dictated by geographical reasons, primarily its proximity to San Francisco, where Chevron’s headquarters is located.

No figures for Chevron’s current or prospective sales in Russia were made available. "We are very much at preliminary stage," Roche said.

Petrolube, Chev-ron’s new partner in Russia, is a local company with 100 percent foreign ownership. It was founded by three Russian-American businessmen who teamed up four years ago and who later built a business franchise selling lubricants, chemicals and spare parts for cars.

"We've been trying to persuade Chevron to come to the Russian market for a long time, but they were not ready to enter it," Petrolube general director Alex Garbuzov said. "We knew that after getting involved in the Caspian, Chevron sooner or later would cast an eye on Russia."

Chevron owns 45 percent in Tengizchevroil, a joint venture in Kazakhstan, and 15 percent in the Caspian Pipeline Consortium, an operator of a pipeline that is key to unlocking the potential of Kazakhstan’s giant Tengiz oil field. The pipeline, able to carry 28 million tons of crude a year, will become operational next year.

In the former Soviet Union, Chevron's Eastern Hemisphere Lubricants is now represented in Russia, Belarus, Kazakhstan, Ukraine, Azerbaijan and Georgia.

Petrolube has entered into agreements with local dealers in Moscow, Nizhny Novgorod, Yekaterinburg, Omsk, Krasnodar, Arkhangelsk and Noyabrsk.

Petrolube has ordered Russian-language stickers to reassure buyers that the products they buy are genuine Chevron products.

"We are after the big boys now," Petrolube’s Garbuzov said. "BP, Shell and other oil majors have a clear lead in this marketplace."

The company runs offices both in Moscow and New Jersey and employs a total of 22 people. It hopes to sell lubricants to retail consumers, transportation and industrial companies.

"Imports of equipment are on the rise," Petrolube’s vice president Valentin Pulver said. "For many types of equipment, only Chevron-made lubricants can be applied."

Chevron's lubricants are tailored to Caterpillar equipment, which includes machinery used in construction, mining, agricultural and forestry.

Retail prices for Chevron's lubricants will be close to $2 per liter, so a 1 gallon (3.79 liter) pack will fetch about $8.

"Besides, the range of Chevron's products is so broad they can be used almost anywhere," Garbuzov said.