All base oil supplies are contracted based on the quotations published by the international agency ICIS.
In case of falling market, base oil supplies may be contracted based on the fixed price (subject to a separate decision by the Pricing Committee of "LLK- International" in accordance with the internal procedure).
Base oils are supplied on CPT and FOB basis with a priority to use the infrastructure of the LUKOIL Group of Companies.
Base oils cannot be supplied directly to third parties located in the regions under supervision of LUKOIL subsidiaries.
There are 3 pricing mechanisms for base oils supplies:
quotation on the date of a railway bill stamp for CPT basis deliveries
quotation on the Bill of Lading date for FOB basis shipments
quotation on the date of prepayment
Financial guarantee acceptable for base oil supplies comprise prepayment and Letters of Credit.
The Company's priority is to supply base oils to end users (producers), and within overall sales portfolio the share of end users cannot be less than 60%.
In addition, the Company aims to contract base oils under long-term supply contracts, and within overall sales portfolio the share of long- term supply contracts cannot be less than 60%.