دبي – LubriV, the subsidiary of Saudi Aramco specializing in base oils, announced the signing of a comprehensive new agreement with its parent company. This contract replaces previous arrangements and secures the operational continuity of the company’s manufacturing facility located in Jeddah, Saudi Arabia. The deal ensures stable access to essential raw materials while establishing clear mechanisms for selling secondary products back to the energy giant.
Key Terms of the Supply Agreement
The agreement stipulates that, subject to the availability of feedstock, LubriV will receive a total volume of twenty-four thousand five hundred barrels per day. In return, the company will sell by-products totaling sixteen thousand five hundred barrels daily to Saudi Aramco. These specific volumes are designed to fully meet the operational requirements of the Jeddah plant, allowing it to run at full production capacity.
Production Capacity and Strategic Impact
This arrangement enables LubriV to maintain an annual output of approximately two hundred seventy-five thousand metric tons of Group I base oils. This production level represents roughly twenty percent of the facility’s total annual capacity, which stands at one point four million five hundred fifty thousand metric tons. The move reinforces the company’s strategic presence in the western region of the Kingdom and helps satisfy growing market demand for high-quality base oils.
Financial Structure and Pricing Mechanism
The financial value of this contract is not fixed but depends on net quantities of feedstock received. It utilizes a pricing equation based on an agreed-upon market index, logistics costs, and related expenses. Payment terms include a maximum settlement period of thirty days. LubriV noted that precise financial impact cannot be determined immediately due to fluctuating market prices and production levels.
Duration and Operational Continuity
The ten-year agreement officially begins on August twenty-ninth, two thousand twenty-six, and remains renewable upon mutual consent of both parties. The company received the signed copy of the contract on August thirty-first. This long-term strategy aligns with LubriV’s goals to ensure operational resilience through dual-production facilities and sustain uninterrupted business activities at the Jeddah site.
This story was produced in the newsroom from the disclosed sources named above.
