IPO Considered for Luberef

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Luberef, a base oil joint venture of Saudi Aramco, is considering an initial public stock offering that would aim to raise more than $1 billion, Bloomberg reported Monday.

The article did not say whether the purpose of a stock offering would be to finance a capital investment or just to raise cash. Aramco officials could not be reached for comment.

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Formally named Saudi Aramco Base Oil Co., Luberef is one of the largest base oil producers in the Middle East. It operates a plant in Yanbu’al Bahr, Saudi Arabia, with capacity to make 708,000 metric tons per year of API Group II oils and 175,000 t/y of Group I oils. A second plant, in Jeddah, Saudi Arabia, has capacity to make 266,000 t/y of Group I.

Aramco is one of the world’s biggest base stock players. It also owns Motiva, which operates a 2 million t/y Group II and III plant on the United States Gulf of Mexico coast, and it owns 63.4% of S-Oil, operator of a 2.1 million t/y plant making mostly Group II and III in Onsan, South Korea.

Bloomberg’s report quoted anonymous sources saying that Luberef has appointed HSBC Holdings and SNB Capital to advise it on the offering.

Aramco owns 70% of Luberef, and Saudi investment firm Jadwa Investments owns the other 30%. Bloomberg’s article said the idea for the IPO is for Jadwa to sell its stake.

A number of Aramco subsidiaries have conducted IPOs. The parent company has also considered IPOs in recent years that did not take place.