Product quality and customer relations

LUKOIL Group entities produce a wide range of products for various industries and vehicle owners in Russia, Europe, Asia, and the Americas. Our priorities are focused on meeting customer expectations, developing and launching new products with enhanced operational and environmental properties, and continually improving quality management approachesAdditional information published on the website.. We make great efforts to get feedback from our clients on the quality of our products and related services. LUKOIL filling stations have a loyalty program for customers, which has grown in popularity each year.

Manufacturing and selling products with enhanced properties

LUKOIL branded products have enhanced properties that enable lower fuel consumption and reduce the content of hazardous substances in exhaust gases. The use of new and innovative products fosters improvements in safety and reduces negative environmental impacts.

Sales of fuel products and lubricants
Type of product 2018 2019 2020
ECTO brand fuel, thousand tonnes 9,603 9,022 8,299
Bunker fuel, thousand tonnes 4,742 4,269 2,732
Aviation bunker fuel, thousand tonnes 3,198 3,357 2,539
Branded oils (premium group), thousand tonnes 594 574 611
Biofuel blendsBiofuel blends are blends of motor gasolines and ethanol (up to 10%) or diesel fuel and fatty acid methyl esters (allowing for a motor gasoline density of 0.755 kg/L and a diesel fuel density of 0.845 kg/L). These products are sold in European countries (the largest volumes are sold in Belgium, Romania, Bulgaria, and Turkey)., million liters 6,515 7,093 6,733
Note.
A temporary decrease in sales of branded oils in 2019 versus 2018 is the result of the MARPOL convention which came into effect on January 1, 2020.

The composition of our motor fuels was 100 percent compliant with environmental standard Euro-5 (environmental class 5) as early as 2012. The combustion products of these new types of fuel contain less sulfur, soot, carcinogens, and other hazardous substances. The Company also produces innovative products for marine shipping, aviation, and industrial companies.

Share of products with enhanced properties, %
2018 2019 2020
Share of ECTO branded fuels (motor gasoline and diesel) in total retail sales of petroleum products in Russia and abroad 63 64 61
Share of environmentally safe marine fuel in total sales of bunker fuel 23 23 16
Share of energy efficient lubricants in total production of lubricants (PVL + CVL)The method of calculating the indicator “Share of energy efficient lubricants” was revised in 2019. Energy efficient lubricants are oils with low rates of high temperature viscosity (less than or equal to XXW-30) for light-duty and cargo product lines. 2018 data was updated. 8 10 16

Production of energy efficient and environmentally friendly oils and lubricants

Our priority in developing production of oils and lubricants is to create innovative products for promising new types of equipment and machinery, as well as highly effective specialized products for various industry sectors.

  • LLK-International develops and supplies low-viscosity Genesis FE (Fuel Economy) oils to consumers in various countries. These oils help reduce fuel consumption by internal combustion engines and boost energy efficiency. In 2020, we successfully developed a low-viscosity engine oil for hybrid engines, approved under the new Daimler specificationLUKOIL GENESIS MCB 225.33 0W-20 engine oil., and a low-viscosity engine oil for MAN trucksLUKOIL AVANTGRADE PROFESSIONAL XLE 5W-30 engine oil, compliant with M3777 specification..

We also produce environmentally friendly oils. Biodegradable products under the BIO brand (BIOLUBE, BIOCHAIN, and BIOFLUIDE) are supplied to the European marketLUKOIL’s 2020 lubes portfolio includes five lines of biodegradable oils: hydraulic (LUKOIL GEYSER BIO), gear oils (LUKOIL STEELO BIO), chain oils (LUKOIL BIOCHAIN, LUKOIL BIOSEGAROL), and spacer oils (LUKOIL LAYER BIO).. Over time these oils degrade into components that, unlike synthetic oils, do not harm the environment.

  • We continue to develop fully biodegradable hydraulic fluids and coolants.
  • Special hydraulic oils that can be degraded in Arctic conditions are being developed.

A monitoring system for lubricants, vehicles, and permanent facilities was implemented in 2020. The monitoring system represents a software and hardware complex powered by industrial internet technologies, which makes it possible to remotely monitor the condition of lubricants, as well as mobile and fixed facilities to preserve their quality.

In the reporting year, LLK-International continued to develop collaboration with several leading world manufacturers of equipment and machinery. For example, we expanded our relations with Volkswagen, a major car manufacturer in Russia and Europe. LUKOIL became the principal supplier of lubricants for MAN engine plant in Nuremberg, Germany.

LLK-International had been a member of the Waste Recycling Association since 2018 until 2020.

Average satisfaction level of consumersThe approach for calculating the indicator was changed in October 2020. The survey is conducted among retail and wholesale clients — oil and lubricant consumers. Percentage of responses attributed to clients satisfied with product quality is indicated. Corporate customer satisfaction in 2020 reached 100%.

Improving the quality of services at filling stations

The four-year program for the reconstruction of filling stations along the federal highways of Russia and in regional centers was completed in 2020. 236 filling stations underwent renovations during this period. This program made it possible to improve the quality of service and expand the range of services provided.

Three liquefied petroleum gas (LPG) sales facilities with a total volume of about 3 tonnes per year were commissioned in 2020 to expand the fuel product line and promote more environmentally friendly fuels. In 2021, we plan to open additional LPG facilities with a total sales volume of over 28 thousand tonnes per year and to launch a pilot project for the installation of a compressed natural gas module (with a capacity of over 9 thousand tonnes per year) at a filling station in Nizhny Novgorod.

Transition to the Guaranteed Oil Product Delivery system from tank farms to end user remains on track. For instance, the LUKOIL-Tsentrnefteprodukt filling stations have completely switched to this system; so have the LUKOIL-Severo-Zapadnefteprodukt filling stations in six regions, and LUKOIL-Uralnefteprodukt in four regions of operation — a total of about 67 percent of filling stations have been enrolled in the system to date. The guaranteed delivery system ensures the quality and quantity of transported fuel and reduces the number of technological operations that expose filling station personnel to hazards.

A Corporate Competence Center and Organizational Development Unit were established on the basis of LICARDLICARD LLC is a Russian company of the LUKOIL Group; information on its operations is available at the website. This helped centralize the standardization and unification of the activities of NGOs and quality scaling of business processes required to support core activities. The implemented “Business idea” feature enables the Company’s personnel to offer suggestions for improving the business segment.

Thanks to the extensive efforts of the Corporate Competence Center, we diversified our training courses for area managers and filling station employees. Constant training guarantees improved quality of customer relations. In addition, in 2020 all filling station employees in Russia were equipped with new uniforms which were designed in response to their comments and requests.

Plans for further improvement of the quality of services involve training and motivational events as part of the Year of Service (2021), the introduction of innovative customer-oriented service scenarios, development of interactive customer channels, and digital services for corporate clients on the mobile application and in personal account. The new concept of catering at filling stations is based on strict quality control of food from the preparer to the customer.

In 2020, LUKOIL Group filling stations ranked number one in the Retailer of the Year award in the “Filling Stations” category.

Relations with filling station customers

We maintain constant contact with the retail customers of our filling stations and analyze feedback from them in order to improve the quality of services as well as the level of satisfaction with our products and services. The main methods of customer interaction are surveys and analyses of client requests and proposals received via the Unified Hotline directly at filling stations and through social networks. LICARD LLC’s Big Data analytics tools facilitate customer segmentation, which in turn facilitates more accurate feedback.

Feedback is used to improve the work of regional managers at filling stations: every month their performance is benchmarked against criteria that take into account requests and complaints received via the Unified Hotline as well as the rating received in the mobile application.

By the end of 2020, the number of LUKOIL GAS STATIONS mobile application users surpassed 4.2 million customers (YoY increase – over 1.4 million people).

Distribution of LUKOIL Group filling stations among countriesData includes LUKOIL Group’s owned, leased, and franchised filling stations, as well as suspended and leased filling stations (as of December 31, 2020). In 2020, the Group continued to optimize its filling station network by cutting down the number of unprofitable leased and franchised stations., as of December 31 each year

A large-scale information campaign was launched during the pandemic for the customers of LUKOIL filling stations. It was designed to:

  • Reduce the amount of human interaction. This was achieved by actively promoting contactless payments using the LUKOIL mobile app.
  • Ensure compliance with disease control measures while at the same time preventing negative reactions to them. To achieve this, filling stations were supplied with informational materials on the need to use personal protective equipment.
  • Encourage customers to use online stores via the “For Those Who Are Home” campaign designed to promote LUKOIL’s partnership program.

The customer relations system we have developed helps us boost overall operational efficiency and create a welcoming environment at filling stations.

Oil for people
of Sustainable Development. Oil for people

Following extensive upgrades, LUKOIL’s oil refineries began to produce world-class motor fuels, including high-octane automobile gasoline, low-sulfur diesel fuel, and universal motor oils as early as the mid-1990s. The social result of these changes was evident as people in the areas of operations gained access to affordable and safer fuel, and the air in the cities became cleaner.

Apart from the goal of improving product quality, since its founding the Company has been building partnerships in the Russian regions. We recognize the social significance of offering charitable support not only to those who need help but also to people who have valuable ideas and the energy to bring them to fruition. This philosophy was behind the work of the LUKOIL Charity Fund and defined the main priorities of external social policy, which have been maintained and developed over the past 30 years.

1990s
2020
1990s

The formerly most mass-produced domestic A-76 and AI-93 gasolines contained lead, sulfur, and benzene, substances that cause severe health problems

2020

LUKOIL fuels no longer contain lead compounds; sulfur content is reduced to 0.03 percent, tar not more than 5 mg per 100 cubic cm, and benzene content is reduces to 0.8 percent

1990s

In 1992, emissions for gasoline (Euro 1) and diesel use contained 2.72 g of carbon monoxide per km traveled

2020

0.5 g/km (diesel) and 0.1 (gasoline) reflect the emission levels for LUKOIL products as early as 2002

1990s

Permanent population in Kogalym in 1992 — about 48 thousand people

2020

About 68 thousand people

1990s

In 1994, four cooperation agreements with constituent entities of the Russian Federation were signed

2020

29 cooperation agreements with constituent entities of the Russian Federation in effect

1990s

37 grants were awarded as part of the first Social and Cultural Projects CompetitionThe first Social and Cultural Projects Competition was held in 2002.

2020

The winners of the contest received 769 grants