Saudi Arabia’s Luberef 2022 profit rises

Saudi Aramco Base Oil, also known as Luberef, saw profit rise in the second half of 2022 versus the first six months of the year even as revenue fell.

Its profit margin rose in response.

The trend mirrored a similar pattern among many base oils producers in Asia-Pacific.

The refiners’ profit margins rose in the second half of the year from the first half as base oils prices fell less steeply than feedstock crude oil prices.

The fob Asia Group II N150 premium to crude averaged around $320/t in second-half 2022. The premium averaged less than $220/t in the first half of last year.

Base oil refiners’ firmer profit margins contrasted with lubricant blenders’ squeezed margins.

Luberef’s operating profit of 2.17bn Saudi Riyals ($579mn) in 2022 rose by 24pc from 2021 to the highest in at least four years.

Its operating profit came to SAR959mn in the first half of the year.

The second-half profit, or full-year profit less first-half profit, came to SAR1.21bn.

Luberef’s sales of SAR10.61bn in 2022 rose by 20pc from the previous year on the back of firm margins and a 6pc rise in sales volume.

Its sales of SAR6.08bn in the first six months of the year already accounted for more than half the full-year revenue.

The higher profit and lower sales in the second half of the year boosted the refiner’s operating profit margin to almost 27pc during the six-month period.

The margin rose from less than 16pc during the first half of the year.

Shares in Luberef were listed on Saudi Exchange in late December.

The sale of almost 30pc of the refiner's shares through an IPO raised more than $1.3bn earlier in the month.

Luberef has production capacity of 1.3mn t/yr of base oils, mostly of Group II base oils at its Yanbu plant. It also operates a 275,000 t/yr Group I base oils unit at Jeddah.

Besides the Mideast Gulf region, its base oils supplies move to Asia-Pacific, India, Africa, Europe and the US.