Valvoline, a brand of Ashland Consumer Markets, a commercial unit of Ashland Inc. (NYSE: ASH), and TNK-BP, Russia’s third-largest oil company, announced a five-year agreement pursuant to which TNK-BP will distribute Valvoline motor oil to the passenger car market in Russia. Financial terms of the transaction were not disclosed.
“We are very excited about this distribution relationship with TNK-BP,” said Sam Mitchell, president, Ashland Consumer Markets. “With its passenger car lubricants market being the largest in Europe – and still growing year on year, Russia represents a significant growth opportunity for passenger car motor oils, particularly with the increasing popularity of Western cars. By combining Valvoline’s brand leadership and high-quality lubricants with TNK-BP’s extensive retail network and local market insights, we believe we can build a strong foundation for future growth and market share expansion.”
"The signing of this distribution agreement with Valvoline, one of the biggest players in the global lubricants market, represents the beginning of a productive relationship between our companies,” said Alfredo Barrios, executive vice president, Downstream, TNK-BP. “This agreement extends the range of high-quality lubricants available to our customers and strengthens TNK-BP’s leadership in the premium Russian market segment of oil and lubricants. It also offers a new level of service and customer support. I'm sure our cooperation provides excellent prospects for effective growth in the Russian oil market for TNK-BP and for Valvoline.”
Under the new TNK-BP distribution agreement, Mitchell believes that Valvoline will be able to achieve significant volume growth in Russia.
“With access to 15,000 retail stores across Russia, TNK-BP offers unparalleled opportunities to introduce Russia drivers to the trusted Valvoline brand and our premium products,” Mitchell said.
TNK-BP is Russia’s third largest oil company and is owned by BP and the AAR consortium (Alfa Group/Access Industries/Renova) on a parity basis. TNK-BP also owns close to 50% of another Russian oil and gas company, Slavneft. TNK-BP accounts for approximately 16% of Russia’s production (including its share in Slavneft). Additionally, TNK-BP owns five refineries in Russia and Ukraine, and retails through a network of 1388 petrol stations.
The company long-term development strategy provides for expansion of the B2B business: TNK-BP has a sufficient potential to take up 15% to 20% of the Russian jet fuel, bitumen and lubricant market.
By 2016, the company plans to increase jet fuel production to 2 MMt against 1.4 MMt in 2011. In March 2012, the company closed a transaction for acquiring an aircraft fueling facility (TZK) in Koltsovo international airport in Yekaterinburg. A formula-based jet fuel supply contract was also signed with Transaero. The supply price is determined by a formula based on market indicators (Platts quotations).
B2B development is an important incentive for improving the company refinery performance, increasing the depth of processing and extending the petroleum product line. In autumn 2011, TNK-BP completed implementation of a new centralized planning system, ASPP ORTEMS, and upgraded the lubricant production facility in Ryazan. This resulted in tripled production capacity and improved business performance.
Ashland Consumer Markets - EMEA
Ashland Consumer Markets is a leading, worldwide producer and distributor of premium-branded automotive, commercial and industrial lubricants and car-care products. It markets Valvoline™ lubricants and automotive chemicals; MaxLife™ lubricants for cars with higher mileage engines; NextGen™ motor oil, created with 50-percent recycled, re-refined oil; SynPower™ synthetic motor oil; Eagle One™ and automotive appearance products; and antifreeze. Key customers include retail auto parts stores and mass merchandisers who sell to consumers; installers, such as car dealers, repair shops and quick lubes; commercial fleets; and distributors. See ashland.com for more information.
About Ashland Inc.
In more than 100 countries, the people of Ashland Inc. (NYSE: ASH) provide the specialty chemicals, technologies and insights to help customers create new and improved products for today and sustainable solutions for tomorrow. Our chemistry is at work every day in a wide variety of markets and applications, including architectural coatings, automotive, construction, energy, food and beverage, personal care, pharmaceutical, tissue and towel, and water treatment. Visit ashland.com to see the innovations we offer through our four commercial units – Ashland Specialty Ingredients, Ashland Water Technologies, Ashland Performance Materials and Ashland Consumer Markets.
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In addition, Ashland may from time to time make forward-looking statements in its filings with the Securities and Exchange Commission (SEC), other news releases and other written and oral communications. These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating performance and financial condition, the economy and other future events or circumstances. Ashland’s expectations and assumptions include, without limitation, internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, operating efficiencies and economic conditions, the anticipated benefits from the TNK-BP distribution agreement, and growth in Valvoline’s sales volumes and market share in Russia. Various risks and uncertainties may cause actual results to differ materially from those stated, projected or implied by any forward-looking statements, including, without limitation, risks and uncertainties affecting Ashland that are described in its most recent Form 10-K (including Item 1A Risk Factors) and Form 10-Q filed with the SEC, which are available on Ashland’s website at http://investor.ashland.com or on the SEC’s website at www.sec.gov. Ashland believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Ashland undertakes no obligation to subsequently update any forward-looking statements made in this news release or otherwise except as required by securities or other applicable law.
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