Saudi Aramco signs 20-year crude supply pact with Korean refiner S-Oil
South Korea-based refiner S-OIL said it signed 20-year long-term crude supply contract with Saudi Aramco, the state-owned oil company of Saudi Arabia, in Dhahran, Saudi Arabia.
The supply contract will enable S-OIL to secure stable supply of the entire crude volume required to run its refinery for the next 20 years, the company said.
The 20-year pact is highly unusual in the market where one-year supply contract is the norm, officials said, adding that it would not be possible if not for mutual trust built between the two companies and a strong friendship between Korea and Saudi Arabia.
“Crude supply contract from the world’s largest oil producing country at a time of serious volatility in the market due to embargo against Iran crude and threats to block Straits of Hormuz will ensure stability in the company’s refinery operation,” an S-OIL official said.
S-OIL’s refining capacity is 669,000 bpd and Saudi Aramco’s total annual supply volume to S-OIL is approximately 230 million bbl in respect of the refiner’s production size.
This is equivalent to 30% of total consumption of petroleum products in Korea, and it will be highly conducive to Korea’s energy security, the company said.
Saudi Arabia is the world’s largest oil producing country with crude reserves amounting to 260 billion bbl.
It has a production capacity of 12 million bpd of crude, which is equivalent to 11% of total global crude output.
Saudi Aramco has maintained long-term investment relations with S-OIL ever since it decided to invest in the Korean refiner in the form of a joint venture in 1991, officials said.
The long-term investment by Saudi Aramco serves as an ideal model of economic cooperation between an oil-producing country and a consuming country, as well as symbol of strong ties between the two countries, S-OIL officials said.
Comments