Saudi Aramco Base Oil (SABO) said it plans to proceed with an initial public offering to sell as much as 29.7pc of the company.The refiner, also known as Luberef, planned to announce a price range for the shares between 4-9 December and a final price on 11 December. It planned to announce the final allocation of shares on 22 December. The first day of trading has yet to be announced.The shares will be listed on the Saudi Exchange's Main Market. .Luberef’s IPO supports its growth ambitions, and is expected to strengthen its already competitive business and unlock new opportunities for its stakeholders.Luberef President and Chief Executive Officer Tareq Alnuaim.Luberef is 70pc owned by Saudi Aramco and 30pc by Jadwa Industrial Investment Co (Jadwa).The sale consisted solely of shares owned by Jadwa. Saudi Aramco was not offering any of its shares, with its stake holding unchanged at 70pc.Luberef’s profit before interest, tax, depreciation and amortisation (EBITDA) came to 2.096bn ($559mn) Saudi Riyals in 2021. Its sales came to SAR8.847bn.The producer’s EBITDA profit margin came to 23.7pc.The strong sales and profit in 2021 reflected the rise in its sales volume of Group II base oils from its Yanbu plant.Sales volume of Group II base oils rose by around 50pc in 2021 from the previous year.Luberef’s production capacity of 1.3mn t/yr consists mostly of Group II base oils at Yanbu, as well as 275,000 t/yr of Group I base oils at Jeddah.It has long-term agreements with Saudi Aramco for the provision of Arab-light crude oil feedstock.The crude oil is considered to be an ideal, ‘lube-friendly’ feedstock for base oils production.Luberef said its base oil crack margin, or difference between its base oils and feedstock costs, came to $599/t in 2021.It said its advantaged feedstock position and reliability of feedstock supply enabled high plant utilisation of 87pc in 2021.The high utilisation helped to lower is base oils unit production costs, excluding feedstock, to around $119/t. It said the cost was more than 60pc lower than the average for other base oils producers.Luberef said it intended to benefit from the structural growth in global demand for Group II and Group III base oils over the coming years.Consumption of premium-grade base oils is rising in response to increasingly stringent regulations on vehicle fuel efficiency and emissions.Luberef planned to complete in 2025 the latest expansion of its Yanbu plant. The expansion would add additional Group II production capacity and introduce Group III production capacity.The rise in Group III capacity would add to the Mideast Gulf region’s position as one of the world’s key suppliers of the premium-grade base oil.The region is already home to a Group III plant in the UAE and in Bahrain, and Shell’s gas-to-liquids Group III+ base oils unit in Qatar.Global Group III prices have held at a steep premium to Group I and Group II base oils over the past year. The high premium reflected their strong supply-demand fundamentals..Saudi Aramco Base Oil gets IPO approval
Saudi Aramco Base Oil (SABO) said it plans to proceed with an initial public offering to sell as much as 29.7pc of the company.The refiner, also known as Luberef, planned to announce a price range for the shares between 4-9 December and a final price on 11 December. It planned to announce the final allocation of shares on 22 December. The first day of trading has yet to be announced.The shares will be listed on the Saudi Exchange's Main Market. .Luberef’s IPO supports its growth ambitions, and is expected to strengthen its already competitive business and unlock new opportunities for its stakeholders.Luberef President and Chief Executive Officer Tareq Alnuaim.Luberef is 70pc owned by Saudi Aramco and 30pc by Jadwa Industrial Investment Co (Jadwa).The sale consisted solely of shares owned by Jadwa. Saudi Aramco was not offering any of its shares, with its stake holding unchanged at 70pc.Luberef’s profit before interest, tax, depreciation and amortisation (EBITDA) came to 2.096bn ($559mn) Saudi Riyals in 2021. Its sales came to SAR8.847bn.The producer’s EBITDA profit margin came to 23.7pc.The strong sales and profit in 2021 reflected the rise in its sales volume of Group II base oils from its Yanbu plant.Sales volume of Group II base oils rose by around 50pc in 2021 from the previous year.Luberef’s production capacity of 1.3mn t/yr consists mostly of Group II base oils at Yanbu, as well as 275,000 t/yr of Group I base oils at Jeddah.It has long-term agreements with Saudi Aramco for the provision of Arab-light crude oil feedstock.The crude oil is considered to be an ideal, ‘lube-friendly’ feedstock for base oils production.Luberef said its base oil crack margin, or difference between its base oils and feedstock costs, came to $599/t in 2021.It said its advantaged feedstock position and reliability of feedstock supply enabled high plant utilisation of 87pc in 2021.The high utilisation helped to lower is base oils unit production costs, excluding feedstock, to around $119/t. It said the cost was more than 60pc lower than the average for other base oils producers.Luberef said it intended to benefit from the structural growth in global demand for Group II and Group III base oils over the coming years.Consumption of premium-grade base oils is rising in response to increasingly stringent regulations on vehicle fuel efficiency and emissions.Luberef planned to complete in 2025 the latest expansion of its Yanbu plant. The expansion would add additional Group II production capacity and introduce Group III production capacity.The rise in Group III capacity would add to the Mideast Gulf region’s position as one of the world’s key suppliers of the premium-grade base oil.The region is already home to a Group III plant in the UAE and in Bahrain, and Shell’s gas-to-liquids Group III+ base oils unit in Qatar.Global Group III prices have held at a steep premium to Group I and Group II base oils over the past year. The high premium reflected their strong supply-demand fundamentals..Saudi Aramco Base Oil gets IPO approval
