S-Oil has reached an agreement to supply up to 28 million barrels of refined petroleum products, primarily gasoil and light naphtha, to Saudi Aramco Products Trading Co., the trading arm of Saudi Aramco, in 2015. As part of the deal, S-Oil also agreed to purchase 120,000 metric tonnes of paraxylene and 2 million barrels of heavy naphtha. The deal is estimated to be worth KRW1.2 trillion (USD1.08 billion).
The move is part of S-Oil’s strategy to diversify its exports, as it faces growing competition from other Korean refineries and declining demand in its traditional markets such as China, which represented 22% of its total exports in the fourth quarter, Japan (21%), Australia (16%) and the U.S. (10%).
In a statement, S-Oil articulated that this deal helps secure a stable buyer and a stable supply for its petrochemical business. “The deal will boost S-Oil’s competitiveness in the global market by taking advantage of Saudi Aramco’s sales channels,” the statement said.
S-Oil, which is the third largest refiner in South Korea, is majority owned by Aramco Overseas Co., also a Saudi Aramco subsidiary. Its refinery complex in Onsan consists of three crude distillation units and a condensate splitter with a combined capacity of 669,000 barrels per day (bpd).