International trader Trafigura plans to start base oil shipments via the privately-owned Vyborg port in northern Russia this year, creating a new export route for its developing niche product business, two industry sources said.

Base oil or engine oil is an important lubricant widely used in vehicles and machinery. It is produced by blending refined crude oil with additives.

Trafigura signed an agreement with the terminal in Vyborg in January to export up to 20,000 tonnes of base oils per month, the sources said. The loadings are expected to start shortly.

Trafigura declined to comment on commercial matters. Vyborg terminal didn’t respond to a request for comment.

Vyborg offers exporters a way of avoiding railway shipments to terminals in Latvia and Lithuania, which have been suspended on several occasions recently due to harsh weather and an increasingly tense relationship between Russia and the European Union, two traders involved in the Russian base oil market said.

The Vyborg terminal is co-owned by Terminal and Port Logistic and has the capacity to store up to 7500 cubic meters of base oils, which could be expanded to 15,000 cubic meters.

However, it also has its disadvantages, including the need for ice breaker assistance during winter and old infrastructure, one of the traders said.

“Up to 20,000 tonnes monthly is a very ambitious volume to load from Vyborg”, he said, adding that the volume represented close to 15-20% of the Russian base oils export market.

Trafigura purchases base oil from Rosneft and Lukoil, the traders said.

One of the biggest offtakers of Russia’s oil and products volumes, Trafigura developed its business in Russian niche oil products such as base oils and bitumen. In 2021 it exported around 250,000 tonnes of bitumen from Russia, industry sources said.
Source: Reuters (Reporting by Natalia Chumakova, Olga Yagova; Editing by Kirsten Donovan)