SAUDI ARABIA —Saudi Aramco Base Oil Company (Luberef) has finalized a 10-year successor Feedstock and Return Streams Supply Agreement with the Saudi Arabian Oil Company (Saudi Aramco) to supply feedstock to Luberef’s production plant in Jeddah, Saudi Arabia, and manage the sale of return streams. While the ultimate contract value is contingent upon net feedstock received based on a market-indexed pricing formula, the agreement secures the necessary supply for the facility to maintain operations at full capacity.
Luberef is a major regional producer of high-quality base oils, supplying global markets with Group I and Group II base oils from its Saudi Arabian production hubs. Saudi Aramco is a global integrated energy and chemicals enterprise that manages vast crude oil reserves, downstream operations, and energy supply infrastructure.
Under the terms of the agreement, effective August 29, 2026, Saudi Aramco will supply an aggregate feedstock volume of 24,500 barrels per day to the Jeddah facility, while Luberef will sell back an aggregate of 16,500 barrels per day of return streams. The supply agreement ensures the uninterrupted production of approximately 0.28 million metric tons of Group I base oils annually at Jeddah, which represents nearly 20% of Luberef’s overall annual capacity of 1.46 million metric tons. The deal incorporates an updated pricing structure accounting for logistics and operational costs with 30-day payment terms.
Securing long-term feedstock supplies stabilizes raw material pipelines for downstream refined products in the Middle East and highlights the strategic emphasis regional energy majors place on operational continuity. By preserving Luberef’s presence in western Saudi Arabia, the deal reinforces supply chain reliability across industrial lubricant markets.
For market investors and corporate stakeholders, the agreement minimizes feedstock supply risks for Luberef and maintains flexible multi-facility operations. Financial benefits will be reflected in company reporting starting late August 2026, directly tied to prevailing global base oil market conditions and production efficiency.
