Two days ago, Yanbu Cement Co. (YCC), which is a publicly listed company, explained to its shareholders in a stock market statement that production at the company is being affected because of Saudi Aramco's "refusal" to provide additional quantities of fuel to its newest production plant.

Saudi Aramco reacted by stating in an official press statement that it continues to provide YCC with whatever has been agreed upon during the agreements signed in the past.

"Saudi Aramco confirms that it is currently supplying Yanbu Cement with all the allocated volumes of fuel oil as per the signed agreement," Saudi Aramco said in the statement released on Monday night.

"Yanbu Cement Co. should have secured the needed fuel ahead of a commitment to expand and build the fifth production line ... The fact that no agreement was concluded in advance absolves Saudi Aramco from responsibility that may result from any fuel shortage," said Saudi Aramco.

Yanbu Cement Co., in its official statement on Tuesday, reiterated that the company was impressing on Saudi Aramco about the urgency for allocating fuel for its new expansion project. "We are not talking about fuel supply to existing production lines. Certainly not," said YCC. "We are talking about fuel supply to our new production line."

Responding to Saudi Aramco's statement that YCC had not taken prior permission from Saudi Aramco before starting the new line, YCC said it obtained a proper license for expansion from the Ministry of Commerce and Industry. "The ministry did not place any condition on us that we should take a prior fuel allocation approval from Saudi Aramco (before starting work on the fifth production line)," it said. "YCC, therefore, pursued with technical studies and finished the bidding and contracting stage (for the new production line) and then applied to Saudi Aramco in 2008 for allocating fuel for its Line 5 expansion project."

YCC states that Saudi Aramco was informed well in advance about its expansion and the additional fuel requirement. "We continuously followed up on the matter with Saudi Aramco but, unfortunately, we did not get any clear reply from them."

Then in mid-2010, Yanbu Cement Co. says it was taken by surprise at Saudi Aramco's final reply that YCC should not pursue any future expansion plan before securing agreement for additional fuel supply from Saudi Aramco. "This was not the procedure when we started our previous production lines," YCC said.

Yanbu Cement Co.'s Line 5 has a clinker capacity of 10,000 tons per day. YCC had signed a turnkey contract with Chain's Sinoma International Engineering Co. to execute the project in 36 months. The project started in September 2008 and is now undergoing a trial run. The new line is expected to bring the total capacity of YCC to seven million tons clinker per annum after the expansion, thus becoming one of the leading producers of cement in the Kingdom. It is for the trial run of this new plant that the company is facing shortage.

Experts agree that YCC's newest production line will considerably meet the rising demand for cement in the Western Region. "The Kingdom's West Coast is currently facing serious shortage of cement," said an independent industry observer. "YCC's new line, therefore, is very much the market's need of the hour."

Observers believe it will be in the industry's interest for the two parties to engage in a constructive dialogue.