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CIS BASE OILS & LUBRICANTS

22 – 24 May   |   Moscow, Russia

Used oil re-refining in Russia: drivers and challenges

Posted on 20-03-2018 by GBC
Data from Kline & Co report

The world leaders in the collection and processing of used oils are the countries of North America and the West, which is provided by strict legislative regulation and the availability of a developed relevant infrastructure.

The obvious fact is that the collection and processing of used oils is higher in countries where the process of collection and processing is stimulated by the state and the industry. For example, in Italy and Spain, the concept of extended producer responsibility (EPR) is used. The concept is based on the work of the reimbursement system, which is implemented with the aim of subsidizing the industry. As part of this system, the lubricant manufacturer makes a “contribution”, which is received by organizations involved in collection or processing (depending on the specific scheme).

As a result, the collection rates of used oils in the US, Canada and Europe are above 70%.

Russia is the largest market for lubricants in Europe, but until recent times there was no legislative framework and there was no system for collecting and processing oils in Russia. The overwhelming number, if not all, of the used oils, motor and industrial, remained with the enterprises and end users and were used by them for resale in the “gray market” or were burnt. Recently, the government has been making efforts to develop the collection and processing of oils following the European version of the scheme for the extended responsibility of the producer. In 2015 the legislation was passed that places responsibility on producers and importers of base oils and lubricants for the disposal of their production waste.

The overwhelming number, if not all, of the used oils, motor and industrial, remained with the enterprises and end users and were used by them for resale in the “gray market” or were burnt.

In spite of some changes for recent years only a small part of the used oils are collected and processed. There is no official statistics on the amount of waste oil recycling, therefore it is not possible to calculate the amount of the collected oils, but according to the estimation of the authoritative company Kline & Ko in 2016 about 600 thousand tons of used oils are collected.

LEGISLATIVE FRAMEWORK AND REGULATION

The law qualifies oils and lubricants as hazardous waste and prohibits the disposal of used oils in land and water, as well as their burning without the prior removal of all heavy additives.

The federal law “On production and consumption wastes” together with several government decrees and Rosprirodnadzor acts create a legislative field regulating the collection and processing of oils and lubricants.

The law qualifies oils and lubricants as hazardous waste and prohibits the disposal of used oils in land and water, as well as their burning without the prior removal of all heavy additives.

The responsibility for recycling is assigned to the producer / importer of these categories of goods, which can execute it by paying a special environmental fee or by organizing collection and subsequent regeneration.

However, according to the Environmental Service (an independent environmental consultant), only 60% of companies comply with the law, and almost all of them fulfill their responsibility by paying environmental charges.

Enterprises that receive used oils as a result of their activities have no obligation to take work off, but they can sell it at a market price. Given the market value of used oils and the costs of regeneration, the market value of commercial oils that can be obtained becomes too high and such a scheme is economically inefficient for producers. Therefore, manufacturers currently prefer to pay an environmental fee and pay processors for the collection of oils.

DRIVERS

CHALLENGES

  • Legislative regulation is adopted and the requirement exists
  • The work within the framework of a working group involving producers, importers, processors and consumers continues and legislation will be improved
  • There is no responsibility of consumers of oils which are owners of working off and are not interested in taking it for processing at a price below the market
  • The legislation does not specify the requirements for accounting for used oils

INFRASTRUCTURE AND COLLECTION

The largest companies engaged in the collection of oils:
“ROSA-1”, “101 Polygon”, “MosEcoPartner”, “Ros-Util”, “Inter Green”, “Oiltrans”, “Proline”, “Ethylomin”, “Refining-oil”
ROSA-1, the only re-processing enterprise in Russia, has an extensive network of collection points, but the processing volumes are too low (about 30 thousand tons), in comparison with the volumes of oil burned and sold out to “grey market”.
Source: Kline & Co

In the conditions of Russian reality and geographically remote industries, sources of waste generation, the existence of one waste management operator for the whole country becomes impossible, therefore at present territorial schemes for handling spent oil products have been introduced. What in fact means, where wastes were formed, there must be recycled.

To coordinate the activities of territorial processors, the Waste Recycling Association was established, but so far, as noted by its President, Vladimir Maryev, the effective operation of the Association is hindered by the lack of sufficient interaction with operators and local authorities.

Rodion Cherednichenko, director of the largest processing company, Rosa-1, says that one of the main problems in organizing the collection is that the waste-collecting enterprises do not keep records of waste and understate the norms of their formation, which leads to the formation of a black market for used oils.

High tariffs of the monopoly carrier Railways also complicate and increase the cost of collecting oils and require significant capital investment from the processor to its own rolling stock.

DRIVERS

CHALLENGES

  • Companies are being established that are ready to develop the collection infrastructure
  • There is a legislative framework for the transport of hazardous waste
  • There are initiatives to coordinate and stimulate enterprises to take out used oils
  • Enterprises that generate waste are not sufficiently interested in participating
  • There is no coordination of all market participants
  • High transportation tariffs increase the cost of infrastructure to collect
  • There is insufficient responsibility and awareness of the need to reduce the burden on the environment

RECYCLING TECHNOLOGICAL SOLUTIONS

The example of successful implementation of the project for the collection and processing of used oils is the company MDD-BEL in Belarus. In 2017, the company won the “Base Oils and Lubricants of the CIS” prize in the nomination “Processing of used oils”

The economic efficiency of processing technologies depends on the quality of the raw materials collected, on the cost of this raw material taking into account all factors and the availability of markets for the realization of the final product at a competitive price. Therefore, it is impossible to determine the efficiency of the oil regeneration project and the selection of the technological scheme prior to the creation of an operating system for collecting, transporting and determining the sales markets for processed products.

World processors have successful technologies for processing used oils. The best examples of technologies allow to receive qualitative base oils of II and III groups. And they are interested in applying their technologies in Russia. Within the framework of the focus on the processing of used oils traditionally held in Moscow, successful experiments of technological schemes were presented in different countries, such companies as Avista oil, Puraglobe, STR Tecoil, as well as the own scientific achievements of Russian scientists. But before the collection system is debugged, the choice of regeneration technology remains a matter of the future, although processors and manufacturers have an active interest now.

DRIVERS

CHALLENGES

  • There are proven technologies that allow obtaining high quality oils
  • Small volume and poor quality of raw materials of mixed physical and chemical characteristics
  • Significant capital costs for full-fledged regeneration

CONCLUSIONS

The coming years will allow us to see the changes in this industry and therefore now is the time to learn about the intentions of the players from the first person and to consider the opportunities for business development.

If you are interested in developing business in re-recycling of used oils and looking for relevant information and meeting decision makers and influencers in Russia and CIS – make sure you registered for Used oils re-refining Focus Day (22 May). The only event in the region dedicated to all aspects of re-refining and recycling of used oils industry.

The development of the processed oil processing industry faces challenges, despite significant efforts by the state to stimulate the process. The most important is the insufficiently thought-out legislative regulation of the interaction of all participants, from producers and importers, state regulators, processors, companies that collect and waste-generating enterprises. Reducing the cost of used oil or the legal requirement for free delivery of work under the environmental responsibility of end users is a key point that will make oil recovery projects efficient and economically and will provide higher volumes of raw materials.

The lack of environmental thinking and environmental protection programs in business leads to the fact that companies in the best case prefer to pay the environmental fee. A cost-effective and ambitious project to collect and fully regenerate oils to product categories that can be marketed is possible, but requires significant capital expenditure. However, decisive actions on the part of the state and increasing the rate of environmental collection force the industry to look for a working business scheme for the regeneration of used oils and it will allow us to see the commercial potential of processing in the future. The coming years will allow us to see the changes in this industry and therefore now is the time to learn about the intentions of the players from the first person and to consider the opportunities for business development.

The publication was based on the materials of the papers from Used oils Re-refining Focus day 2017. Gabriel Tarle – Kline & Co, Apu Gosalia, FuchsRodion Cherednichenko, ROSA-1 Vladimir Maryev – Recycling Association, Vladimir Alencin, Ecological Combine. 

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