High base oil prices and volume sales didn’t translate into profitability for Saudi Aramco Base Oil Co., known as Luberef. Narrow crack spreads for base oils and by-products sent gross profit into a slump by more than a third in the first half of 2024.
Luberef wasn’t alone in tackling narrow refinery margins in the first half of 2024. After a period of strong growth, margins tumbled in the second quarter of 2024 by as much as half in Europe and two-thirds in Asia.
According to data from the Saudi Exchange, Luberef’s sales in the first six months of the year were 4.9 billion riyals (U.S. $1.3 billion), up 11.425% from the same period in 2023, when sales were 4.41 billion riyals. At the same time, gross profits were 700.74 million riyals, down 36.6% from 1.1 billion riyals the year before.
A scheduled hydrocracker shutdown to replace a catalyst in the first quarter dented income, but bounced back in the second quarter, clocking a 25% increase over the previous quarter.
According to Al Rajhi Capital Research, revenue of 4% year-on-year was still ahead of expectations and the company maintains volume growth projections of around 5%.
Luberef operates two base oil plants in Yanbu and Jeddah with combined capacity to produce 1.3 million metric tonnes per year of API Group I, II and III base oils.