Saudi Aramco plans to invest up to US$1.6 billion for a nearly 20 percent stake in South Korean refiner Hyundai Oilbank, Reuters reports.
Under the proposed deal, the Saudi state oil giant will take up to 19.9 percent in Hyundai Oilbank, South Korea’s smallest refiner by capacity, according to the report.
The stake will be purchased from Hyundai Heavy Industries Holdings, which currently owns 91.13 percent of Hyundai Oilbank.
The deal will help Aramco expand its foothold in Korea, one of the firm’s biggest Asian buyers of crude oil, the report noted.
Saudi Aramco is already the biggest shareholder in South Korea’s No.3 refiner, S-Oil Corp, with a 63.41 percent stake.
Saudi Arabia is the top crude oil supplier to South Korea, the world’s fifth-biggest importer.
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 was quoted as saying in a statement.
According to a Reuters source, Hyundai Heavy plans to offer a discount of 10 percent to Aramco in a block deal.
Hyundai Heavy said it plans 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.
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