Luberef said Sunday that a previously announced expansion of its base oil plant in Yanbu’ al Bahr, Saudi Arabia, will increase capacity by 230,000 metric tons per year.
The refiner, a subsidiary of Saudi Aramco, again said the project will also upgrade the facility, enabling it to make API Group III base stocks, but it still has not said how much Group III the plant will be able to make.
Officials said the upgrade to Group III will improve the plant’s profitability.
“Globally, Group-III base oil prices have maintained a steep premium in comparison to Group-I and Group-II prices over the past year in response to steady supply and rising demand,” Luberef President and CEO Tareq Al-Nuaim said in a news release. “Through this project, we are proud to enhance our Yanbu facility, process more products and support the Kingdom’s economic growth as a result.”
The new information was disclosed in a news release stating that the company awarded an engineering, procurement and construction contract to Petrojet Co., a petroleum industry contractor owned by the Egyptian government and based in Cairo. The news release did not disclose the cost of the project but said it will be completed in 2025.
Luberef first mentioned the expansion in late November when it announced plans to conduct an initial public stock offering. The stock sale was executed in late December, raising 4.95 billion riyals (U.S. $1.32 billion).
The expansion will make the Yanbu plant almost as big as the biggest base oil plant in the Middle East, the Pearl gas-to-liquids joint venture between Shell and Qatar Petroleum, in Ras Laffan, Qatar, which has capacity to make 1.37 million t/y of mostly Group III stocks.
It could also make Aramco a bigger player in the Group III segment, depending on how much capacity of that category is added. Aramco is majority owner of S-Oil, which operates one of the world’s largest base oil plants, a facility in Onsan, South Korea, with capacity to make 822,000 t/y of Group III, 1,150,000 t/y of Group II and 150,000 t/y of Group I, according to Lubes’n’Greases’ Base Stock Plant Data.
Aramco also owns Motiva, operator of a 2,017,000 t/y plant in Port Arthur, Texas, United States, that makes almost all Group II.
Luberef also operates a plant in Jeddah, Saudi Arabia, with capacity to make 266,000 t/y of Group I.