Saudi Review

Plant set in Korea

Saudi Arabia, the world's biggest oil exporter, may invest up to $3.5 billion to build a plant in South Korea to process more profitable clean fuels, Seoul's energy ministry said.

Saudi Aramco has a 35 per cent stake in S-Oil Corp, but the energy ministry statement did not say whether Saudi Arabia would make the investment jointly with South Korea's third-biggest oil refiner.
S-Oil spokesman P G Kim said they had not been informed of the possible new investment.
Saudi Crown Prince Sultan bin Abdul-Aziz said during a recent meeting with visiting South Korean Prime Minister Lee Hae-chan he would order a positive consideration of the plan to build the Bunker-C cracking plant, the ministry said.
It said the investment could reach between $3.0 billion and $3.5 billion for the plant, which processes fuel oil, or Bunker-C oil, into more profitable gasoline, diesel and kerosene.
Asian refiners are pouring billions of dollars into upgrading their refineries in an effort to meet tightening fuel standards throughout the region.
By the end of 2007, countries that consume more than half of Asia's 24 million barrels per day (bpd) oil demand will move to lower-sulphur emission standards, a Reuters survey has found. By 2010, nearly all of Asia will have tightened specifications.
Analysts said the plant was highly likely to be built for S-Oil and would be the right move in terms of growth for the refiner given rising fuel demand by neighbouring China, the world's second-biggest oil consumer.
"The world needs cleaner fuels like diesel and gasoline more and more," said Cha Hong-sun, an analyst at Goodmorning Shinhan Securities.
"The new plant is a desirable move for the company's future growth in the medium- and long-term."
The move should result in a rise in S-Oil's demand for high-sulphur crude oil from Saudi Arabia, the biggest oil supplier to South Korea, which is the world's number four crude oil buyer. S-Oil sources all of its crude from Saudi Aramco.
South Korea imported 21.2 million barrels of crude oil per month on average from the kingdom in 2004. 
S-Oil already has a 290,000 bpd Bunker-C cracking plant.