The Russian government considers RZhD important to the country’s economy and strategically valuable because it plays a key role in Russian industry and transportation. This alliance was created after a decision by [Russian president Vladimir] Putin, B.-O. Ahrstrom, the companys first vice president, told Lube Report on Monday. I personally saw the document signed by the president that approves this enterprise.

Lukoil President Vagit Alekperov, Volgograd oblast Governor Andrey Bocharov and Valentin Gapanovich, RZhDs senior vice president, all simultaneously pushed the button to symbolically kick start the plants production.

The 1.3 billion rubles (U.S. $34 million), 30,000 metric tons per year grease plant is fully financed by Lukoil. It was ordered by RZhD back in 2008 to replace the rail transporters own grease plant, the outdated Kuzaks facility in Moscow, which is scheduled for demolition. This plant was opened in 1936 with the special purpose to supply the ex-Soviet Union railways with domestically-made greases, said Evgeny Shkolnikov, deputy of RZhDs technical resources department. The transfer of intellectual property and formulations used for decades in Kuzaks gave our company a shareholder right in Intesmo, despite the fact that we didnt finance the project.

The railway company is the largest grease consumer in Russia, using around 13,000 tons of greases for its carriages and railway construction machines annually. At least one third of the Intesmo plants annual production will go toward RZhDs needs, while the rest is meant for use in the countrys automotive and industrial sector, Oleg Mosin, the companys general director, told Lube Report. Russia consumes around 60,000 tons of greases annually.

The plant will produce three types of Flex-branded greases: Polyflex greases for general use, Thermoflex high-temperature greases and Greenflex biodegradable greases.

We use six types of thickeners – lithium, K lithium, calcium, K calcium, aluminum and sodium. The plant features four packaging lines, self-cleaning pipelines and automatically operated units for continuous production and units for batch production. Finished products will be packaged in a variety of forms, from 200-liter barrels, to 18-, 10- and 1-liter buckets, to 1-liter and 500-milliliter cans, cartridges and 100 milliliter tubes, Mosin said.

Intesmos principal equipment design contractor is United States-based FMC Technologies.

The plant is operated by 147 employees, and Intesmo hopes its formulations will match the imported Western brands of greases, which account for almost a third of the Russian grease market.

After penetrating Russias domestic grease market, the company plans to promote its products in the European market as well. Our Hamina blending plant in Finland and [recently acquired] OMV lube plant in Vienna have few grease formulations in their product portfolios, and we want to rebrand them to start our Europe sales from there, Mosin said.

In summary, the lower profitability of sales meant for RZhD gives the companys management an estimate of eight years to return the investment, but we will push harder to shorten this period, he added.

The company also plans to supply neighboring countries such as Belarus and the Baltic states, as well as the railway companies of the Central Asia states.

Lukoil last year held 48 percent of the countrys lubricants market. RZhD operates more than 86,000 kilometers of railway and is among the worlds largest railway companies.