Luberef inks 10-year agreement with Aramco to supply feedstock, sell return streams

The value of the agreement depends on the net quantities of feedstock received

Saudi Aramco Base Oil Co. (Luberef) signed a new agreement with Saudi Arabian Oil Co. (Saudi Aramco) for the supply of feedstock and sale of return streams, replacing the previous agreement.

In a statement to Tadawul, the company said the agreement was signed on Aug. 30, 2026, with a 10-year term commencing on Aug. 29, 2026. It is renewable by mutual agreement.

The deal is aligned with the company’s long-term strategy to ensure operational continuity at its Jeddah facility and Group I base oil production. It also supports maintaining the company’s strategic presence in the Kingdom’s Western Region and preserving operational flexibility through the availability of two production facilities.

Luberef said the value of the agreement depends on the net quantities of feedstock received and is calculated based on a pricing formula that includes an agreed market index, in addition to logistics and other related costs. The payment period is 30 days.

The relevant financial impact cannot currently be determined, the company said, noting that it will be reflected in the financial statements starting Aug. 29, 2026. However, the financial benefits will depend on prevailing base oil prices, production levels, and relevant market conditions.

The arrangement calls for the supply of 24,500 barrels of feedstock per day and the sale of 16,500 barrels of return streams per day, contingent on Saudi Aramco's feedstock availability.

These volumes represent the Jeddah facility’s full feedstock requirements to operate at full production capacity for Group I base oils.

Luberef added that the availability of feedstock will enable the company to continue producing about 275,000 metric tons per year of Group I base oils at its Jeddah facility, representing around 20% of the company’s total annual production capacity of 1.455 million metric tons.

It also indicated that Saudi Aramco is a related party to the agreement, adding that it received the signed copy of the agreement on Aug. 31, 2026.

Meanwhile, the company noted it received the signed copy of the agreement from Saudi Aramco on Monday, Aug. 31.