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Luberef, a subsidiary of Saudi Aramco, reported a 3.9% higher profit for the second quarter of the year despite a sizeable decline in revenues.
The company, which reported the figures in a statement for the Saudi stock exchange, attributed the increase in profit to tax adjustments that reduced its expenses and higher crack margins, Forbes reported.
Luberef produces base oils.
The company reported $693.1 million in sales for the second quarter of the year, down from $879.7 million a year earlier. Profits stood at $121.3 million.
Aramco has a 70% interest in the company that produces base oils. The other 30% was bought by local investment bank Jadwa. Luberef has two production facilities in Saudi Arabia with a combined annual capacity of 1.3 million tons of base oils.
The parent company, which will be reporting second-quarter results next month, has seen its profits decline this year because of lower oil prices on international markets. Like the Big Oil majors, Aramco reported a lower net result for the first quarter, citing lower demand and lower prices.
The net result for the parent company in the first quarter was still impressive at $31.9 billion but lower than the $39.5 billion a year earlier. It was still higher than analyst expectations, Reuters noted at the time.
Aramco has been actively expanding its downstream operations, seeking to guarantee long-term demand for its crude oil production. The company recently inked a new refinery deal with Pakistan, finalized the purchase of a stake in a Chinese petrochemical producer, and sealed an $11-billion petrochemical deal with TotalEnergies.
The latter deal will see a new petrochemicals complex getting built in Saudi Arabia, featuring one of the largest steam crackers in the region, the Saudi state company said last month.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com