Oil refiner signs deal to supply 2 tln won worth of oil products to Aramco Trading Singapore Co annually for next 20 yrs in exchange for Aramco supplying 150,000 brls of crude oil daily
A view of the Hyundai Oilbank’s Daesan oil refinery in Daesan,South Chungcheong Province. (Photo: H. Oilbank)
Hyundai Oilbank Co., a refining unit under Hyundai Heavy Industries Group, said June 27 that it secured a 2.08 trillion-won ($1.8 billion) deal to sell petroleum products to an affiliate of Saudi Aramco.
Under the deal with Aramco Trading Singapore Pte Ltd., Hyundai Oilbank will supply gasoline, diesel and jet fuel for the next 20 years, the company said.
Earlier, Saudi Aramco, the world's largest oil producer, agreed to supply 150,000 barrels per day of Arabian crude to Hyundai Oilbank from 2020 to 2039, while its affiliate Aramco Trading Co.
also signed a similar contract with the South Korean refiner for non-Arabian crude supply.
Saudi Aramco is the second-largest shareholder of Hyundai Oilbank with a 17 percent stake.
The Saudi state-run company bought the stake in April for $1.2 billion.
Hyundai Heavy Industries Group announced on June 27 that its refining unit, Hyundai Oilbank Co., will purchase 2.09 trillion won ($1.81 billion) worth of non-Arabian crude oil from Aramco Trading Singapore Pte Ltd., an affiliate of Saudi Aramco.
The latest contract accounts for 9.71 percent of the company’s recent sales.
The refiner will buy 100,000 barrels of non-Saudi crude oil per day. The deal will run for 20 years from January 2020 to December 2039.
Saudi Aramco and its affiliates signed 12 agreements with major South Korean companies on Wednesday to reinforce relationships with Asia’s fourth biggest energy consumer, expand international operations, and support the region’s energy security with the expansion of Arabian crude oil supply to Asian markets.
Saudi Arabian crude flows to Korea are set to grow further with the signing of several deals expanding the volume of crude oil supply to Korea, Saudi Arabia’s state-owned oil company said in a statement Wednesday.
Saudi Aramco signed an agreement with Hyundai Oilbank to supply Arabian crude oil to the company, Aramco said in the statement.
The agreement was signed on the sidelines of visits to Seoul by Crown Prince Mohammed bin Salman of Saudi Arabia and Saudi energy minister Khalid al-Falih.
Aramco’s trading arm, Aramco Trading Company, will also supply non-Arabian crude oil to Hyundai Oilbank under a separate agreement signed with the company, it said.
Aramco did not provide details of the grade, duration and volume of crude to be supplied.
Saudi Arabia is already the biggest crude oil supplier to South Korea. South Korea most recently imported 24.75 million barrels of crude from the Kingdom in May, up 3.4% year on year from 23.94 million barrels a year ago, according to South Korea’s customs data.
However, South Korean refiners have been actively diversifying their sources of crude oil and condensate barrels over the past several years, further expanding the reach of U.S. crude exports in Asia.
“We can increase imports of Saudi Arabian barrels on the back of the closer ties with Saudi Aramco,” an official at Hyundai Oilbank said.
In April, Saudi Aramco acquired a 17% stake in Hyundai Oilbank from Hyundai Heavy Industries.
This deal makes Saudi Aramco the second-largest shareholder of Hyundai Oilbank, following Hyundai Heavy Industries Holdings with a 74.1% stake in Hyundai Oilbank.
Hyundai Oilbank has been importing some 2 million barrels/month of crude from Saudi Arabia on average so far this year - Arab Heavy, Arab Light, and Saudi Arab Extra Light.
Hyundai Oilbank can use more heavy grades as it started commercial production in September last year at new solvent deasphalting (SDA).
The 80,000 b/d SDA unit uses residual fuel oil as a feedstock to extract solvent, which is used to make middle distillate products and gasoline.