Saudi Aramco Base Oil gets IPO approval

Saudi Aramco Base Oil Co received approval from the country’s capital market regulator for an initial public offering (IPO) to sell as much as 29.6pc of the company.

Saudi Aramco Base Oil, also known as Luberef, is 70pc owned by Saudi Aramco and 30pc by Jadwa Industrial Investment Co.

The Capital Market Authority’s (CMA) approval of the IPO is valid for six months from 24 November and will be cancelled if the listing of Luberef’s shares is not completed within this period.

The timing of any such listing in the next six months would coincide with Saudi Aramco’s purchase of US blender Valvoline’s global lubricants business for $2.65bn.

That transaction is expected to be completed early next year.

The lube business would provide a valuable outlet and hedge for Luberef’s base oils supply.

The global reach of the lube business would also provide a useful hedge against an economic slowdown in any one region.

Luberef’s production capacity of 1.3mn t/yr consists mostly of Group II base oils at Yanbu, as well as Group I base oils at Yanbu and Jeddah.

Saudi Arabia’s base oils exports have expanded beyond the Mideast Gulf and India in recent years, with a growing volume of supplies moving to Africa, as well as to other more distant markets like southeast Asia and the US.

Luberef, along with US-based Motiva and South Korea’s S-Oil, have been part of Aramco’s global base oils alliance since 2019.

The company will issue a prospectus ahead of the sale of its shares with details about its activities, management, and financial statements.