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JEDDAH: Luberef, the base oil company of Saudi Arabian Oil Co., is launching a new specialized production facility in Yanbu that will manufacture transformer oil and white oil used in power generation, pharmaceutical and food companies.

Called Lube Hub, the facility will enable localization of these specialty products in the Kingdom. The venture will attract producers and operators of base oil-related products.

“We are trying to attract business investment to start some of the specialty products that are not made in Saudi Arabia, including transformer oil and white oil,” said Tareq Al-Nuaim, president and CEO of Luberef, at Arab News.

White Oil is a premium, highly refined mineral oil used in food processing plants and applications that require exceptionally pure white mineral oil.

The Royal Commission for Jubail and Yanbu will provide the land and utilities, while Luberef will supply the mining companies with raw materials.

“The royal commission is providing the land and utilities while we work with different government entities to put together a package that will attract investment into the business,” Al-Nuaim said on the sidelines of a conference on oils from base and lubricants held recently in Jeddah. .

During the conference, Luberef signed four memorandums of understanding with international oil trading companies such as Apar Industries, Chemoil, National Oil and Chemical Co., Petromin and Day Candle.

Tareq Al-Nuaim, Chairman and CEO of Luberef. (Provided)

“The investment will not be allocated by us; this will be done by interested companies. We have seen corporate interest in the specialty oils sector,” he said.

According to Al-Nuaim, Lube Hub is an unlimited investment opportunity as more land would be granted when the former is filled with specialty oil producers and operators associated with the base oil industry.

Founded in 1976 and based in Jeddah, Luberef is one of the largest base oil producers in the world and the leading virgin base oil producer in Saudi Arabia.

From its two facilities in Yanbu and Jeddah, Luberef has a combined production capacity of 1.3 million metric tons per year of base oils used in high-value branded lubricants, primarily for automotive, marine and industrial. “We plan to increase production in the future,” the CEO said.

About 36% of its production is for Saudi consumption; the rest is exported to 15 markets around the world. “Our strategy is always to satisfy the local market first, and the excess is exported,” he said. While Luberef is a 70/30 joint venture between Saudi Aramco and Jadwa Industrial Investment Co., there have been talks of plans to raise more than $1 billion through an initial public offering.

According to Bloomberg, the plan was to sell the 30% stake held by JIIC, which it had acquired from Exxon Mobil Corp. in 2007.

With this decision, Luberef would have joined the long list of Aramco subsidiaries already listed on the Saudi stock exchange, including Saudi Basic Industries Corp. and Rabigh Refining & Petrochemical Co.

The CEO neither confirmed nor denied the discussion, but was optimistic about increased investment to meet future business demands.

“The company has been in business for 45 years and has been very successful in meeting the increased demand, so I think that will continue to happen in the future.”

Saudi Arabia is seeing growing demand for base oil as it is poised to become the fastest growing economy this year. In fact, local demand has exceeded pre-pandemic levels and the international market is also catching up.

“The Saudi economy is the fastest growing economy in the world today, and with many projects underway, we are seeing pretty healthy growth for base oil. volumes, we are back to the pre-pandemic level.”

Saudi Arabia hosted the 17th Conference of Independent Middle East Commodities, Base Oils and Lubricants Intelligence Services at the Ritz-Carlton Jeddah from October 10-11.

This year’s edition was the first to be held in Saudi Arabia, driven by ICIS’s desire to capitalize on the wave of growth enjoyed by the Kingdom’s thriving base oils and lubricants industry in recent years.