Implementing the Transition to Higher-Value Base Oils
As global demand shifts from traditional Group I base oils toward higher-quality Group II and Group III products, Luberef is executing a focused strategy to enhance operational efficiency and upgrade its product portfolio.
In parallel, the Company maintains a strategic commitment to supplying Group I base oils for as long as demand persists, leveraging its unique strengths in Group I production.
This balanced approach positions Luberef at the forefront of the industry’s structural transformation, reinforcing its role in advancing the global lubricants and base oil market. This direction aligns with Luberef’s mission to achieve excellence in producing base oils and specialty products for key end-markets while realizing its vision to become a leading global supplier of premium, high-performance solutions.
Base Oil Focus
Luberef operates as a pure-play base oil producer, optimizing output and efficiency regardless of fuel market dynamics. The Company consistently targets utilization rates above 90%, well above the global base oil industry average of around 50-60%, while maintaining a production cost approximately 60% lower than international peers.
Strategic growth is driven by expanding production of high-value Group III and Group III+ base oils while preserving operational flexibility and presence in Group I markets. Access to nearby advantaged Arab Light feedstock and integration within the Aramco ecosystem enhances yield, feedstock security, and cost competitiveness.
Unique Market Positioning
As the sole producer of virgin base oils in Saudi Arabia, and the only regional supplier positioned to produce all three base oil groups upon completion of the Yanbu Growth II Expansion, Luberef holds a distinctive and strengthening position in the global market. In addition, securing and expanding OEM approvals remains a key strategic focus, enabling entry into higher-value lubricant applications and markets.
The Company continues to strengthen its presence in high-netback export markets, particularly in Africa and the Indian subcontinent, supported by its strategic Red Sea location. Furthermore, localization initiatives, including the LubeHUB industrial cluster, reinforces Luberef’s role as a cornerstone of Saudi Arabia’s downstream development.
Other Strategic Initiatives
Complementing its core base oil strategy, Luberef pursues targeted initiatives in technology, localization, and sustainability. Through collaboration with industry and research partners such as KAUST (King Abdullah University of Science & Technology), the Company is advancing innovation and product diversification.
In 2025, Luberef integrated GHG Scope 1 and 2 emissions reporting into corporate KPIs, enhancing environmental performance oversight. The Company is also evaluating re-refining and recycling opportunities as local waste management frameworks evolve, alongside continued investment in AI to improve operational efficiency and decision-making.
With the Jeddah facility approaching the next phase of its lifecycle, Luberef’s management is assessing opportunities to leverage the site for environmentally and technologically driven projects. These initiatives aim to unlock low-cost, high-return opportunities that align with the Company’s sustainability objectives and long-term value creation strategy.
Our Strategy
Three Pillars for Sustainable Growth
Luberef’s strategy is built around three integrated pillars that guide value-driven investment decisions across the business.
- Base Oil Focus
- Unique Market Positioning
- Other Strategic Initiatives
Growth Platforms for the Future
The Yanbu Growth II project is a cornerstone of Luberef’s strategy, increasing the facility’s total base oil capacity to 1.26 million metric tons and enabling flexible switching between Group II and Group III production based on market demand. This flexibility, combined with LubeHUB, expanded OEM approvals, and diversification into white oils and transformer oils, positions Luberef to capture long-term value as the market evolves.