Luberef signs amendment agreement with Saudi Aramco to supply additional reduced crude oil

Saudi Aramco Base Oil Company – Luberef announced that it has signed an amendment to the Supplemental Feedstock Supply Agreement dated July 1, 2021, to receive an additional supply of 5,000 barrel per day of Reduce Crude Oil (RCO) from Saudi Arabian Oil Company (Saudi Aramco), which shall be used as a feedstock for the production of base oils and by-products at the Luberef facility in Yanbu, leading to increase the total quantity of RCO received in Luberef’s Yanbu Facility from 45,000 barrel per day to 50,000 barrel per day subject to product availability.

The company stated on Tuesday on Tadawul that this increase in RCO quantity is part of business transformation program which is in line with Saudi Aramco’s transformation initiative for its joint ventures. Feedstock supply cost will depend on an agreed formula and is linked to Market prices.

The amendment is effective from 01.06.2023 for twelve (12) months and renews automatically for subsequent periods of twelve (12) months unless terminated by either Party pursuant to the termination provisions provided in the main Yanbu Feedstock Supply Agreement.

The company said that the positive financial impact is expected from Second quarter this year 2023, which cannot be determined exactly and will depend on the base oil market prices.

The additional RCO volume has the potential to increase Luberef’s GII base oil volumes by around 88,000 metric tons per year, and bright stock volumes by around 5,000 metric tons per year.