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April 16, 2019

Volume 2 Issue 16

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Aramco to Take Smaller Stake in Oilbank

Saudi Aramco reached an agreement to purchase a 17 percent stake in South Korean oil refiner Hyundai Oilbank for 1.4 trillion won ($1.2 billion), the state-owned company announced yesterday. This agreement differs from a slightly larger planned investment agreement announced in late January

In January Aramco planned to invest as much as $1.6 billion for up to 19.9 percent of the refiner.

The agreement was reached between Aramco’s subsidiary Aramco Overseas Co. and Hyundai Heavy Industries Co., Hyundai Oilbank’s largest shareholder. Hyundai Heavy Industries previously owned 91 percent of the refiner. Aramco has the option to buy an additional 2.9 percent stake in Hyundai Oilbank, Hyundai Heavy Industries Holdings noted in a regulatory filing.

This investment is aimed at supporting Aramco’s crude oil placement strategy by providing a dedicated outlet for Arabian crude oil to South Korea, according to the press release. “This acquisition demonstrates [Aramco’s] investment in the highly complex refining sector,” Abdulaziz Al-Judaimi, the company’s senior vice president of downstream, said in the release.

Aramco was unable to respond to questions by deadline.  

Oilbank partnered with Shell to create Hyundai Shell Base Oil, a 50-50 joint venture that operates a 1.25 million metric ton per year API Group II base oil plant in Daesan, South Korea.

Aramco currently fully owns or owns stake in several base oil plants across the global. It wholly owns Motiva, which operates a 2 million t/y plant in Port Arthur Texas, after buying out its joint venture partner Shell in 2017. The company is also a majority owner in Luberef, a 70-30 joint venture with Jadwa Investments, which operates two Saudi Arabian plants that have the combined capacity to produce 358,000 t/y of Group I and 708,000 t/y of Group II base oils.

The company also owns a 63.4 percent stake in fellow South Korean refiner S-Oil, which has a 2.1 million t/y Group II and III plant in Onsan, South Korea.