Saudi Aramco acquires 17 per cent stake in South Korea's Oilbank
The acquisition will help the Saudi state with its oil placement strategy
Saudi Aramco reached an agreement with Hyundai to acquire a 17 per cent stake in Oilbank, one of the South Korean company’s subsidiaries, in a transaction valued at $1.25 billion.
“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.
“The investment supports Saudi Aramco’s broader downstream growth strategy, as well as providing long term crude oil options and offtakes as part of our trading business,” he added.
The downstream component of the petroleum industry focuses on refining oil, the manufacturing of petrochemicals and the marketing and distribution of refined products and natural gas. Saudi Aramco, along with other national oil companies in the Middle East, have made strategic moves to acquire refining and chemical assets in East Asia, from where much of the demand comes. The company has been ramping up investment downstream in both Saudi Arabia as well as abroad as a way to increase profit margins and mitigate the volatility of oil prices.
The Saudi state producer will invest through the Aramco Overseas Company. The investment will support Aramco’s crude placement strategy by allowing for a dedicated outlet for Arabian crude in South Korea, one of the biggest buyers of Middle Eastern crude.
Hyundai Oilbank, a private operator, has 650,000 barrels per day capacity at a fully integrated refining plant at the Daesan complex. The firm, which began operating in 1964, has around five subsidiaries with interests in refining, base oil, petrochemicals as well as a network of gas stations.
Saudi Aramco last year partnered with Abu Dhabi National Oil Company to jointly invest in a $44bn refinery on India’s western coast as part of efforts to boost its downstream portfolio abroad.
Updated: April 15, 2019 04:16 PM