Royal Dutch Shell PLC (RDSA) will by the end of 2010 become the first international oil company to launch a lubricants plant in Russia, the world's third-largest market, the Anglo-Dutch oil major said Monday.
The plant, which will cost Shell more than $100 million to build, will have a capacity of 200 million lifters a year - or about 180,000 metric tons - making it one of the company's largest. It is to be located in the town of Torzhok, 230 kilometers northwest of Moscow.
Russia is the third-biggest lubricants market in the world, behind the U.S. and China.
"Shell Lubricants has seen seven consecutive years of profitable growth in Russia, and we believe that setting up lubricants production facilities will help us capitalize on further growth opportunities," said David Pirret, executive vice president of Shell Lubricants.
Last year, Shell's market share in Russia grew by 6%, against a drop in the size of the overall market by 10%.
Shell is a minority partner in the Sakhalin-2 project in Russia's Far East and holds a 50% stake in the West Siberian Salym field.
"Russia is a country of strategic importance for Shell, and today's announcement is further evidence of our commitment to grow our business here," said Chris Finlayson, head of Shell's operations in Russia.
In 2006, the company gave up control of its Sakhalin-2 project to state-controlled gas giant OAO Gazprom (GAZP.RS) after Russian authorities accused it of breaking environmental regulation.
Finlayson sees construction of the lubricants plant as a sign of improved investment climate in Russia's energy sector.
"This sends a very good signal of what you can achieve in a short period of time in Russia," Finlayson said. Shell has no plans to invest in refining in Russia, he added.