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Salahaddin H. Dardeer

SAUDI ARABIA - Energy & Mining

Yanbu expansion to increase production from 550,000 tons to 1.2 million tons

President, Saudi Aramco Base Oil Company

Bio

Salahaddin H. Dardeer is the President & CEO of Luberef, a Saudi Aramco Jadwa Joint Venture company. Luberef operates two base oil refineries in KSA and markets its products locally and globally. He has almost 30 years of experience in Petroleum Refining and Gas Processing Plants with in Saudi Aramco. Prior to joining Luberef, he served as Manager of Jeddah Refinery. He held various managerial positions and has extensive experience in refinery operations, maintenance, and engineering. He was then appointed as Samref board member. He holds a BSc in chemical engineering from King Saud University. He has attended several leadership training programs, including the President Leadership Challenge, the Wharton business school for executive program and many more relevant leadership development programs in the recent past. He has combined advanced studies in petroleum refining and chemical engineering with broad and detailed experience in plant operations, process engineering, equipment design, feasibility studies, economic evaluations, equipment reliability, and refinery upgrading studies.

"Our production will go from 550,000 tons to 1.2 million tons."

What is the significance of Luberef’s expansion at Yanbu to produce Group two base oil?

We are doing a major expansion at our plant in Yanbu to produce Group-II base oil, which is amongst the highest quality produced in this region. Our production will go from 550,000 tons to 1.2 million tons. Of course, we did that because we are a leader in the Middle Eastern market, especially in the GCC countries, and we go as far as India, Pakistan, and Nigeria. We have a good name in the market as well as superior quality. We have no problem selling our product in the region or internationally. In that regard, the base oil industry is moving to a higher quality now, and we decided to develop an expansion to our refinery for this. Hopefully it will be on stream by the end of next year and we will be providing our customers with this high-quality product. This is a very competitive market, so concentrating on improving product quality is crucial. The Yanbu expansion is a capacity increase, and it will therefore also impact our revenues. It is important to us to deliver what the customer requires, as automotive manufacturing and all related industries are pushing toward higher quality. Group-I is no longer considered the highest quality, although it is going to continue for a while. Some parts of the US are moving to Group-III, which is much more advanced. We have to do this at the optimum cost and also generate more revenue. That is what the Yanbu expansion will bring to us.

How have operations changed since oil prices crashed in 2014?

The operation has not been impacted; we will have to continue producing. The changes in the market reflect that it is not only a drop in the prices; there is also a drop in the economy in general. We, like any Saudi company, depend on general market conditions; if there is a recession then it impacts the demand of base oil. Nevertheless, we are doing a great job, and I think that Luberef, in 2014 and 2015, made good money when comparing its size and business. Today, as we speak, base oil has the same problem as crude; the market is flooded. Whoever wants to survive has to ensure that they are producing to the highest quality.

One initiative intended to overcome the impact of low oil prices is Vision 2030. How does Luberef position itself within these reforms and what are your expectations?

When you say impact, it is positive and negative. There are some things that are not very clear as we speak, regarding some of the strategy. That being said, we built our strategy, and we have enough tactics to meet these strategies in order to expand our business, generating revenue and jobs for Saudis while adding value to society. If we do this, I do not think it will contradict or have an effect on Vision 2030. For example, today we suffer from counterfeit products, like everywhere else. Vision 2030 also talks about quality of materials that can be used in the country, so that helps us. 2030 talks about being innovative and technology creators and leaders in the market. All of these are a plus for us, even though today we are suffering for some of global trade deficit, when the market is open and everyone is allowed to import anything. Now, when we start focusing on materials, what we bring to the country, and what we export from the country, a company like Luberef represents high quality. This will help us, and it will also contribute to the success of Vision 2030. Finally, we are 100% Saudi here in our Jeddah operations and maybe 70% in Yanbu, and we want to see it grow. It is one of our main goals to employ Saudis; it is an important standard. We also need to keep a certain percentage for knowledge transfer. I do not think it will be 100% at any time, but to keep between five and 10% of people that carry the highest degree of international expertise.

You mentioned Yanbu is coming on stream next year. What are your expectations for 2017?

We are looking forward to this expansion; it is a big achievement in Luberef history. When this comes on stream it means more exports to other markets, which is important to us. We will further grow the Luberef brand, and in the country, producing high-quality base oil at a higher grade, Group-II. It will be a great achievement and we are very proud. We will be open to other markets, we have been talking to customers about our new products, and we have almost everything sorted with contracts on hand. Because some of the product cannot be used in the nearby area, like the GCC, maybe we will go further to India or Pakistan, even Europe. It is a big challenge and a very exciting time ahead.

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