As the price of oil has plunged with no sign of an imminent recovery, Hyundai Oilbank CEO Moon Jong-bak has been making moves to help the oil refinery find new growth engines. President Moon feels that the oil refinery’s future is at stake, as it cannot go on with its present operational portfolio unless it is reformed. He said the oil company is at a critical stage for its survival.
Moon told his executives on Aug. 2 that they are faced with a critical and the mixed xylene plant should be built as a future growth engine for the oil refinery. He said they should find new growth engines to keep the oil refinery in operation.
It is wrong, the Hyundai Oilbank CEO warned, to hang on to the current business portfolio, and they should strive to paint a better picture for the oil company’s survival.
The oil refinery should find new growth engines now as the company has enough room for new investments. Its business portfolio should be reformed to include more stable businesses.
The mixed xylene plant that the CEO mentioned is being built at the oil refinery’s Daesan Oil Refinery Complex in Daesan, South Chungcheong Province. After completion it will have an annual capacity to turn out 1 million tons of mixed xylene.
He continued to warn that the oil market appears to be bleaker in the second half than it was during the first half and, “all of you should have tough minds to face it.”
He said the shale gas business has been growing rapidly as a replacement energy, while oil-producing nations in the Middle East have been turning themselves into oil refiners by building oil refineries one after another.
Moon said they should create their own path, not just follow past strategies, to ensure their own future.
Moon’s moves are intended to warn the entire oil refinery business to be ready for the tough times ahead, although its operation has thus far faired much better compared to its rival companies.
Hyundai Oilbank’s second quarter results showed an improvement over the preceding year with sales reaching 2.8 trillion won and operating profit rising to 220 billion won, up 7.9 percent from the preceding quarter, and up a whopping 490 percent year-on-year, thanks to the increased oil refining margin in the quarter.
The domestic oil industry took a 2.3 trillion won hit due to the rapid fall in the price of crude oil last year, but Hyndai Oilbank made around 200 billion won in net profit in 2015 thanks to its well-managed oil inventory.
Owing to the operational performance, the oil refinery for the first time issued bonds in March with an annual interest rate of 1 percent, which was well received by the market. CEO Moon remarked that the oil refinery’s excellent performance has been well recognized at the market, although the interest rate was only 1 percent per annum.
Hyundai Oilbank has been leading the oil industry in its operating profit for 12 quarters in a row and leads the industry in operating profit for four years in a row.
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