Saudi Aramco plans to invest $1.6 billion in South Korean refiner Hyundai Oilbank

Hyundai Oilbank has a total of 650,000 barrels per day of refining capacity in the southwestern city of Daesan and also aims to expand its petrochemical business. (AFP)
Updated 14 February 2019

Saudi Aramco plans to invest $1.6 billion in South Korean refiner Hyundai Oilbank

  • Saudi Arabia is the top crude oil supplier to South Korea, the world’s fifth-biggest importer
  • Hyundai Oilbank has a total of 650,000 barrels per day of refining capacity

SEOUL: Saudi Aramco plans to invest up to $1.6 billion for a nearly 20 percent stake in South Korean refiner Hyundai Oilbank, expanding its foothold in one of its biggest Asian buyers of crude oil.
Saudi Aramco is already the biggest shareholder in South Korea’s No.3 refiner, S-Oil Corp, with a 63.41 percent stake, and the latest deal should help Aramco boost crude oil sales to Hyundai Oilbank, the South’s smallest refiner by capacity.
Saudi Arabia is the top crude oil supplier to South Korea, the world’s fifth-biggest importer.
In 2018, South Korea imported 323.17 million barrels of crude from the kingdom, or 885,408 barrels per day (bpd), according to data from Korea National Oil Corp.
Saudi Aramco’s chief executive told Reuters in November that it planned to expand its market share in Asia — including China, India, Malaysia and Indonesia — and Africa.
Saudi Aramco said it plans to buy a stake of up to 19.9 percent of Hyundai Oilbank from Hyundai Heavy Industries Holdings, which now owns 91.13 percent of Hyundai Oilbank.
“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.
Saudi Energy Minister Khalid Al-Falih said in early January that the state oil giant will be listed by 2021.
Aramco, the world’s largest crude producer, plans to increase investment in refining and petrochemicals in a bid to cut its reliance on crude as demand for oil slows.
Hyundai Oilbank has a total of 650,000 barrels per day of refining capacity in the southwestern city of Daesan and also aims to expand its petrochemical business.
In May last year, it announced plans to build a 2.7 trillion won petrochemical plant with South Korea’s Lotte Chemical.
Saudi Aramco plans to value Hyundai Oilbank at 10 trillion won, or 36,000 won per share, Hyundai Heavy Industries Holdings said in a statement.
A person familiar with the matter said the company plans to offer a discount of 10 percent to Saudi Aramco in a block deal that will require board approval from both firms.
News of the stake sale drove up shares of the parent company by as much 6.6 percent.
Hyundai Heavy Industries Holdings also said it planned to “reconsider” the stock market listing of the refinery arm after completing the stake sale, possibly this year.
Hyundai Oilbank, which had aimed to list on South Korea’s stock exchange in 2018, delayed the plan until this year due to regulatory scrutiny of its balance sheet.
The holding company, which also includes shipbuilder Hyundai Heavy Industries, said it would use the funds from the Oilbank deal to invest in new businesses and improve its financial health.
The shipbuilding firm is part of a joint venture with Saudi Aramco and others to build a shipyard on Saudi Arabia’s eastern coast.


US President Trump does not want to do business with China’s Huawei

Updated 19 August 2019

US President Trump does not want to do business with China’s Huawei

  • US Commerce Department expected to extend a reprieve that permits Huawei to buy supplies from US companies to service its customers

WASHINGTON: US President Donald Trump on Sunday said he did not want the United States to do business with China’s Huawei even as the administration weighs whether to extend a grace period for the company.
Reuters and other media outlets reported on Friday that the US Commerce Department is expected to extend a reprieve given to Huawei Technologies Co. Ltd. that permits the Chinese firm to buy supplies from US companies so that it can service existing customers.
The “temporary general license” will be extended for Huawei for 90 days, Reuters reported, citing two sources familiar with the situation.
On Sunday, Trump told reporters before boarding Air Force One in New Jersey that he did not want to do business with Huawei for national security reasons.
He said there were small parts of Huawei’s business that could be exempted from a broader ban, but that it would be “very complicated.” He did not say whether his administration would extend the “temporary general license.”
Speaking earlier on Sunday, National Economic Council director Larry Kudlow said the Commerce department would extend the Huawei licensing process for three months as a gesture of “good faith” amid broader trade negotiations with China.
“We’re giving a break to our own companies for three months,” Kudlow said on NBC’s “Meet the Press.”