Saudi Aramco signed 12 agreements with South Korean companies, including Hyundai and Korea National Oil Corporation, to expand the international operations of the world's largest crude exporter and support the region's energy security.
"Today's agreements mark a new era of co-operation with our Korean partners who will play an increasingly important role in our strategy to capitalise on new initiatives that include long-term energy supply, maritime and infrastructure development, and breakthrough research and development in the automotive, crude to chemicals, and non-metallic sectors," said Aramco president and chief executive Amin Nasser.
“Only a few decades ago, Korean companies played a vital role in Saudi Aramco’s upstream offshore growth development. Since then, they have moved into other sectors matching Aramco’s diversification strategy," Mr Nasser added.
The accords cover shipbuilding, engine manufacturing, refining, petrochemicals, as well as crude supply, sales and storage. They are part of Aramco’s long-term strategy to shift into downstream – which refers to the refining and chemicals segments of the energy value chain – and expand and strengthen its portfolio in this space.
In March, Aramco agreed to buy a 70 per cent stake in Sabic, the region’s biggest chemicals company, citing growth in petchems as central to its downstream expansion strategy.
As part of the shift, the world’s biggest oil exporting company has also been looking to sell more products, and make new investments in refining and chemical assets, in the growing markets of Asia, from where much of the demand originates.
Last year, state-owned Abu Dhabi National Oil Company (Adnoc) and Aramco signed an agreement to jointly invest in a $44 billion (Dh166bn) refinery on the west coast of India.
In April, Aramco also reached an agreement with Hyundai to acquire a 17 per cent stake in Oilbank, one of the South Korean company's subsidiaries, in a transaction valued at $1.25bn.
Saudi Arabia's new deals announced on Wednesday with South Korean companies deepen their bilateral business ties.
They include an agreement between Hyundai Heavy Industries (HHI), Aramco and Saudi Arabian Industrial Investments Company (Dussur) to establish a joint venture to build an engine manufacturing and aftersales facility in Saudi Arabia. Aramco will own 55 per cent of the venture, while HHI and Dussur will own 30 per cent and 15 per cent, respectively.
Aramco also signed a pact with HHI to increase the latter's share in International Maritime Industries (IMI) to 20 per cent from 10 per cent, and two further pacts involving HHI, Saudi shipping company Bahri and IMI to explore co-operation in shipbuilding.
Aramco and its subsidiary Aramco Trading Company struck crude oil sales agreements with Hyundai Oilbank, and Aramco also signed a pact with Hyundai Motor Company to accelerate the expansion of the hydrogen ecosystem in Saudi Arabia and South Korea, and explore the use of advanced non-metallic materials in the automotive and other industries.
Three other agreements were signed with South Korean companies this week.
These were with Hyosung to build a car carbon fibre manufacturing facility in Saudi Arabia; R&D collaboration with GS Holdings to identify investment opportunities in Saudi Arabia; and to co-operate with Daelim Industrial on chemical product sales and development in the kingdom.