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Saudi Aramco To Invest $1.6 Billion In South Korean Crude Refinery Hyundai Oilbank

Saudi Aramco To Invest $1.6 Billion In South Korean Crude Refinery Hyundai Oilbank
South Korea, which is one of the largest importers of crude oil, has been chosen by state-owned Saudi Aramco for an investment of up to $1.6 billion against an almost 20 per cent stake in the Hyundai Oilbank refinery there. This would consequently increase the presence of the Saudi Arabian oil giant in South Korea.
With a stake of 63.41 per cent, Saudi Aramco also is the largest shareholder in the third largest refinery in South Korea S-Oil Corp. this deal would allow the Saudi oil producer to increase crude oil sales to Hyundai Oilbank which is the smallest refinery of South Korea.
South Korea is the fifth-biggest importer of crude in the world and Saudi Arabia is amongst the largest suppliers for it. According to data from Korea National Oil Corp, Saudi crude oil accounted for 323.17 million barrels of imports into South Korea in 2018 which is about 885,408 barrels per day (bpd), according to data from Korea National Oil Corp.
Saudi Aramco has been planning to increase its market share in Asia which included concentrating on China, India, Malaysia and Indonesia as well as Africa, the company’s chief executive had told the media in November last year.
Its latest investment plan involves purchasing of as much as 19.9 percent stake in Hyundai Oilbank which would be bought from Hyundai Heavy Industries Holdings which currently has a stake of 91.13 per cent in Hyundai Oilbank, the Saudi company had said. 
"Saudi Aramco seems to be boosting investments in downstream projects ahead of an initial public offering," said Lee Dong-wook, an analyst at Kiwoom Securities.
The state oil giant will be listed by 2021, Saudi Energy Minister Khalid al-Falih had said in early January.
The largest crude oil producer Saudi Aramco wants to reduce its dependency on crude oil because of slowing in demand by making more investments in refining and petrochemicals.
Based in the South Western city of Daesan, South Korea, the total refining capacity of Hyundai Oilbank is about 650,000 barrels per day. The company also wants to further expand into petrochemical business.
According to a statement from Hyundai Heavy Industries Holdings, the valuation of Hyundai Oilbank by Saudi Aramco would be at 10 trillion won, or 36,000 won per share.
There were reports that a discount of 10 per cent would be offered to Saudi Aramco in a block deal. There was an uptick of 6.6 per cent in the shares of the parent company following the breaking of the news.
It planned to "reconsider" the stock market listing of the refinery arm after completing the stake sale, which possibly could end this year, said Hyundai Heavy Industries Holdings.
Regulatory scrutiny of its balance sheet resulted in a delay in the planned listing of Hyundai Oilbank on South Korea's stock exchange in 2018.

Christopher J. Mitchell

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