Hyundai Heavy says Aramco buys 17% stake in S.Korean refiner unit for $1.2bn

State-owned Saudi Aramco has agreed to buy a 13 percent stake in South Korean oil refiner Hyundai Oilbank for $1.24bn. (File photo/AFP)
Updated 15 April 2019

Hyundai Heavy says Aramco buys 17% stake in S.Korean refiner unit for $1.2bn

  • Saudi Aramco reached an agreement to acquire a $1.24 billion stake in South Korean refiner Hyundai Oilbank
  • It would provide Saudi Arabia's state-run oil company with a dedicated outlet for its crude to South Korea

SEOUL: The biggest shareholder in South Korean oil refiner Hyundai Oilbank said on Monday that state-owned Saudi Aramco had agreed to buy a 17 percent stake in its oil processing operations for 1.4 trillion won ($1.24 billion).
Hyundai Heavy Industries Holdings said in a regulatory filing that it had signed a sales agreement with Saudi Aramco that included an option for Aramco to buy an additional 2.9 percent stake in Hyundai Oilbank.
The agreement, reached with an Aramco subsidiary, Aramco Overseas Co. B.V (AOC), will support the mother company’s crude oil placement strategy by providing a dedicated outlet for Arabian crude oil to South Korea, Aramco said in a statement.
In late January, Hyundai Heavy said Aramco planned to invest up to $1.6 billion for as much as 19.9 percent of the South Korean refiner to expand its foothold in the country.
Aramco bought the stake in the unlisted refiner for 33,000 won per share, which is slightly lower than its initially planned price, reflecting market conditions, said an official at Hyundai Heavy who provided no further details.
The investment is meant to support Aramco’s broader downstream growth strategy and provide long-term crude oil options and offtakes as part of the company’s trading business, Abdulaziz Al-Judaimi, Aramco’s senior vice president of downstream, said in the statement.
Hyundai Heavy has said it plans to “reconsider” listing its refinery arm after completing the stake sale.
The Hyundai Heavy official said the company would take its time in deciding whether to go ahead with its refining arm’s public listing, without setting a timeframe.
Hyundai Oilbank, South Korea’s smallest refiner by capacity, has a total of 650,000 barrels per day of refining capacity in the southwestern city of Daesan and aims to expand its petrochemical business.


Japan’s households tighten purse strings as sales tax and typhoon hit

Updated 06 December 2019

Japan’s households tighten purse strings as sales tax and typhoon hit

  • Falls in factory output, jobs and retail add to fears of worsening slowdown after Tokyo unveils $122bn stimulus package

TOKYO: Japanese households cut their spending for the first time in almost a year in October as a sales tax hike prompted consumers to rein in expenses and natural disasters disrupted business.

Household spending dropped 5.1 percent in October from a year earlier, government data showed on Friday.

It is the first fall in household spending in 11 months and the biggest fall since March 2016 when spending fell by 5.3 percent. It was also weaker than the median forecast for a 3 percent decline.

That marked a sharp reversal from the 9.5 percent jump in September, the fastest growth on record as consumers rushed to buy goods before the Oct. 1 sales tax hike from 8 percent to 10 percent.

“Not only is the sales tax hike hurting consumer spending but impacts from the typhoon also accelerated the decline in the spending,” said Taro Saito, executive research fellow at NLI Research Institute.

“We expect the economy overall and consumer spending will contract in the current quarter and then moderately pick up January-March, but such recovery won't be strong enough.”

Household spending fell by 4.6 percent in April 2014 when Japan last raised the sales tax to 8 percent from 5 percent. It took more than a year for the sector to return to growth.

Compared with the previous month, household spending fell 11.5 percent in October, the fastest drop since April 2014, a faster decline than the median 9.8 percent forecast.

Analysts said a powerful typhoon in October, which lashed swathes of Japan with heavy rain, also played a factor in the downbeat data. Some shops and restaurants closed during the storm and consumers stayed home.

Separate data also showed the weak state of the economy.

The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales data, fell a preliminary 5.6 points to 94.8 in October from the previous month, the lowest reading since February 2013, the Cabinet Office said on Friday.

It was also the fastest pace of decline since March 2011, according to the data.

Real wages adjusted for inflation, meanwhile, edged up for a second straight month in October, but the higher levy and weak global economy raise worries about the prospect for consumer spending and the overall economy.

While the government has sought to offset the hit to consumers through vouchers and tax breaks, there are fears the higher tax could hurt an economy already feeling the pinch from global pressures.

Japan unveiled a $122 billion fiscal package on Thursday to support stalling growth and as policymakers look to sustain activity beyond the 2020 Tokyo Olympics.

A recent spate of weak data, such as exports and factory output, have raised worries about the risk of a sharper-than-expected slowdown. The economy grew by an annualized 0.2 percent in the third quarter, the weakest pace in a year.

Analysts expect the economy to shrink in the current quarter due to the sales tax hike.