President Kwon Oh-kap of Hyundai Oilbank, won the Order of  Industrial Service,  Silver Tower at the 49th Trade Day ceremony this year, and the oil refinery traces its history back to 1964 when Kukdong Shell Oil launched its operation, which was taken over by Hyundai Group and changed its name to the current one in April 2002. The oil refinery introduced the Oilbank, the brand name for its gas stations for the first time in Korea. The new owner changed its name to Hyundai Oilbank.

During the foreign exchange crisis in 1997, the oil refinery had to sell its majority stake to IPIC, an affiliate of Abu Dhabi National Oil Company for $500 million, but in August 2010, Hyundai Heavy Industry bought them back, taking over the management rights of the oil refinery as the company became an affiliate of the shipbuilder.

The oil refinery with capital of 1.225 trillion won in 2011 has a total of 1,825 employees including 1,044 at its Daesan oil refinery in Daesan, South Chungcheong Province, and 437 in its Seoul office. The oil refinery has a wholly-owned subsidiary in Singapore, and branch offices in a number of key cities around the world including Shanghai, Dubai, the United Arab Emirates, and Hanoi. By 2020, the company plans to set up five wholly-owned local subsidiaries in nine countries and four branch offices in a bid to explore new markets for its oil products and to secure a competitive edge for its products around the world.

For the first time in Korea, Hyundai Oilbank built the hydrocracker and delayed coking unit to strengthen the competitive power of the oil refining industry in Korea by boosting its oil refining ratio to 34.4 percent. In 2011, the company put online its residue fluid catalytic cracking facilities at a total investment of 2.5 trillion won.

With the heavy oil cracking facilities, the oil refinery has been able to refine heavy residual oil into light oil products such as gasoline, kerosene, diesel, and other high value-added oil products including propylene, the raw material for petrochemical products, and export them, boosting oil product exports by 2.7 times before the construction of heavy oil cracking facilities and 3.2 times in monetary terms, contributing heavily to making oil products the top export item in Korea in the first half of this year. Since October 2011, the Oilbank has been supplying diesel to the Australian market and currently is building depots for gasoline and diesel in New Zealand under a long-term contract in cooperation with an Australian bank. The oil refinery also supplies oil to Vietnam and the Philippines through arrangements with the state oil companies in those Southeast Asian countries.

Hyundai Oilbank signed a joint venture contract with Shell Oil to set up and run an oil plant with the capacity to produce 20,000 barrels of base lube oil daily when it is completed in 2014, the company said recently.

Under the agreement, the two partners will set up Hyundai-Shell Base Oil Co. in March to build and run the projected lube oil company, which is to be built inside the Hyundai Oilbank compound in Daesan, South Chungcheong Province, targeted for completion in the second half of 2014. The construction cost is estimated to run around 400 billion won with the Korean partner holding a 60-percent stake along with the management rights and Shell will hold the remaining 40 percent.

The two partners agreed that most of the base lube oil produced at the new plant will be supplied to Shell’s lube oil plants in various parts of the world and exported to foreign countries including China through Shell’s global sales network.

Hyundai Oilbank projects a profit of over 80 billion won annually on sales of 700 billion won when the new lube oil plant goes on stream in 2015.

It will be the first time for Hyundai Oilbank to set up a lube oil plant and produce a base lube oil. This is in addition to other petroleum businesses including the BTX joint venture plant with Cosmos Oil of Japan and an oil storage terminal in Ulsan, South Gyeongsang Province, all high value-added businesses that the oil refinery took on since its affiliation with Hyundai Heavy Industry a year and a half ago.