Saudi Aramco’s subsidiary, Aramco Overseas Company B.V., has completed the acquisition of 17 per cent stake in Hyundai Oilbank, a private oil refining company in South Korea, in a transaction valued at $1.2 billion.

An agreement to this effect was reached between the parent companies- Aramco and Hyundai Heavy Industries-in April 2019.

A statement from the company said: “The investment in South Korea’s Hyundai Oilbank supports Saudi Aramco’s downstream growth strategy of expanding its global footprint in key markets in profitable integrated refining, chemicals and marketing businesses which enable Saudi Aramco to place crude oil and leverage its trading capabilities.”

The acquisition is a part of the oil giant’s strategic move to foray into the downstream market in East Asia by acquiring refining and petrochemical assets in the region. The company has been ramping up investment downstream in both Saudi Arabia as well as abroad as a way to increase profit margins and mitigate the volatility of oil prices.

The acquisition will also support Aramco’s broader downstream growth ambitions as well as its crude placement strategy by allowing for a dedicated outlet for its crude in South Korea, one of the biggest buyers of Middle Eastern crude.

The company is on track to complete its acquisition of a 70 per cent stake in petrochemicals major SABIC in the first half of 2020.  In October 2019, SABIC signed a $50mn deal with US-based industrial service firm Baker Hughes develop local capacity, creating downstream business opportunities and industry diversification.

In Asia, Saudi Aramco’s downstream expansion includes its partnership with Malaysia’s state energy firm PETRONAS and a potential stake in Indian conglomerate Reliance Industries Ltd’s (RIL) oil-to-chemicals division.

Hyundai Oilbank, a private operator which began operating in 1964, has 650,000 barrels per day capacity at a fully integrated refining plant at the Daesan complex.  The company and its five subsidiaries deal in oil refining, base oil, petrochemicals and a network of gas stations.

In 2018, Saudi Aramco teamed up with Abu Dhabi National Oil Company to jointly invest in a $44bn refinery on India’s western coast as part of efforts to boost its downstream portfolio abroad.