Kwak Yeon-soo is a digital editor at The Korea Times creating, editing and curating digital content for the newspaper’s website, mobile app and social media. She previously covered a diverse array of cultural, political and business topics.
Saudi Aramco flexing muscle in Korea
Logo of Saudi Aramco is seen at the 20th Middle East Oil & Gas Show and Conference (MOES 2017) in Manama, Bahrain, March 7, 2017. / Reuters-Yonhap
By Kwak Yeon-soo
By Kwak Yeon-soo
Saudi Aramco is expanding its presence in Korea by acquiring stakes or forging business ties with domestic refiners, according to industry analysts Tuesday.
On Monday, Saudi Arabia's state-run crude oil producer became the second-largest shareholder of Hyundai Oilbank, Korea's fourth-largest refiner affiliated with Hyundai Heavy Industries, after taking a 17 percent stake in the company. Hyundai Oilbank has a refining capacity of 650,000 barrels per day.
Saudi Aramco also owns a 63.41 percent stake in the country's No.3 refiner S-Oil. The company entered Korea in 1991 by acquiring a 35 percent stake in Ssangyong Refinery, the predecessor of S-Oil. It took over an additional 28.4 percent stake in S-Oil for 2.2 trillion won ($2 billion) from Hanjin Group in 2014.
Hyundai Heavy said the firm had agreed to buy the 17 percent stake in Hyundai Oilbank for 1.4 trillion won.
The deal included an option for the Saudi oil giant to acquire an additional 2.9 percent stake in Hyundai Oilbank.
The holding firm, which is the refiner's largest shareholder with a 74.1 percent stake, added that Aramco will be able to exercise its shareholding authority.
“This acquisition demonstrates our investment in the highly complex refining sector in Asia, and continuous commitment to the region's energy security and development,” said Abdulaziz Al-Judaimi, Saudi Aramco's senior vice president of downstream, in a statement.
“The investment supports Saudi Aramco's broader downstream growth strategy, as well as providing long term crude oil placement supply options and product offtakes as part of our trading business.”
In addition, Saudi Aramco has become a business partner of SK Innovation, Korea's largest refiner.
It recently agreed to buy a 70 percent stake for $69.1 billion in the Saudi chemical company SABIC, which has been operating a polyethylene plant in cooperation with SK Global Chemical, a subsidiary of SK Innovation.
In 2015, SK Global Chemical joined hands with SABIC to establish a joint company, SABIC SK Nexlene Company (SSNC), to produce high performance polyethylene.
Polyethylene is used in a wide range of products including industrial packaging films, interior material for automobiles, and cable sheathing.
If SABIC becomes a subsidiary of Aramco, SK Innovation will be Aramco's third partner in Korea, following S-Oil and Hyundai Oilbank.
When contacted by The Korea Times, a Saudi Aramco Korea official declined to comment on its business here.