US Ashland makes motor oil distribution deal with Russia's TNK-BP

24 April 2012 16:54  [Source: ICIS news]

HOUSTON (ICIS)--Ashland has reached a five-year deal under which Russian oil firm TNK-BP will distribute Ashland’s Valvoline motor oils and lubricants in Russia, an executive for the US-based specialty chemicals firm said on Tuesday.

Samuel Mitchell, president of Ashland’s consumer markets business, said the agreement with Russia’s third largest oil company would provide Ashland with access to 15,000 outlets in Europe’s largest market for passenger-car motor oil.

Prices for Valvoline in Russia are higher, on a per unit basis, than in North America, Mitchell said.

Ashland expects to begin shipping Valvoline to TNK-BP in its fiscal fourth quarter, which begins in July, Mitchell told analysts during the company's fiscal second-quarter results conference call.

The deal with TNK-BP is part of Ashland’s strategy to further strengthen its international consumer markets business, he said. He would not disclose the deal's volume or financial details.

In the fiscal second quarter ended 31 March, Ashland’s consumer markets business saw lubricants sales volumes fall 9% year on year to 40.7m gal, primarily because of weakness in the North American market.

However, the segment's sales rose 6% year on year, to $520m (€395m), as increased pricing outpaced rising base oil costs.

Mitchell added that Ashland plans to pass on to customers recently announced base oil price increases.

Going forward, base oil costs would continue to rise on the back of high crude oil prices, he said.

However, volatility in base oil should be reduced in coming years because of planned capacity increases, he said.

Base oil represents the largest raw material cost in Ashland’s consumer markets segment.

($1 = €0.76)

By: Stefan Baumgarten
+1 713 525 2653

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