Report: Luberef’s USD1 billion IPO planned for second half

The initial public offering (IPO) of Saudi Aramco Base Oil Co., also known as Luberef, is being planned for the second half of 2022, according to a Bloomberg report. Saudi Aramco hopes to raise USD1 billion from the IPO of its base oil refining unit. The report said that Citigroup Inc. is among the banks leading the initial public offering which. The local unit of HSBC Holdings Plc and SNB Capital is also an advisor, it said.

Luberef is a joint venture between Saudi Arabia’s state-owned oil company Saudi Aramco and Jadwa Industrial Investment Group. Luberef owns and operates two base oil refineries in the Kingdom of Saudi Arabia. The first refinery was established in Jeddah in1978 and the second one in Yanbu Industrial City in 1997. The Jeddah refinery was designed at 270,000 metric tonnes per annum (MTPA) while the Yanbu refinery was designed at 280,000 MTPA. Initially both produced Group I base oils.

In 2017, Luberef expanded its Yanbu refinery to produce Group II base oils. The expansion, which cost USD1 billion, added 600,000 MTPA of Group II base oil capacity, raising its total production capacity to just over 1.2 million metric tonnes per annum.

Saudi Aramco has created a unified base oil brand called Aramco Base Oils, which unifies the base oils produced by Luberef in Saudi Arabia, Motiva in the United States, and S-Oil in South Korea.

Jadwa Industrial Investment Group, which owns a 30% stake in Luberef, is reportedly planning to sell its stake. Jadwa Industrial Investment Group became the first domestic firm to participate in a joint venture with Saudi Aramco in 2007, when ExxonMobil exited its Luberef joint venture. State-owned Saudi Aramco owns the remaining 70% of Luberef.

Parent company Saudi Aramco raised more than USD29.4 billion during its 2019 initial public offering. Early this year, it was widely reported that the Saudi government, which still owns the majority of Saudi Aramco, was holding talks with advisers on another potential share sale, which could bring in more than its initial IPO. Aramco is also considering selling stakes in its trading business and retail fuels unit.

Luberef would join other Aramco subsidiaries already listed on Saudi Arabia’s stock exchange, including Saudi Basic Industries Corp. (SABIC) and Rabigh Refining & Petrochemical Co.