SOARING IMPORTS of crude oil have been a recent feature in South Korea as the country moves to meet rising domestic demand.

With almost no indigenous energy resources of its own to draw upon, the country is dependent on imports, and some analysts believe that this year could see record import figures.

Driving the growth is an economy which expanded by 12.8 per cent in the first quarter of this year.

Saudi Arabia is the leading crude oil supplier to South Korea, accounting for almost a third of the total imports.

However, with crude prices remaining high, many South Korean refiners, including S-Oil (in which Saudi Aramco has a 35 per cent interest) are being forced to raise retail gasoline prices.

Nevertheless, S-Oil (formerly Ssangyong) posted a pretax profit of $116 million for the first half of this year, albeit down 22 per cent from a year ago.

The company attributed the fall in profits to a $29.5 billion loss from the depreciation of its securities holdings, although S-Oil's total sales in the first half grew 71 per cent on the year.

Through an affiliate, Saudi Aramco purchased its 35 per cent interest in the S-Oil Corporation in 1991. S-Oil, which has a strong marketing position in the Pacific Rim region, operates a 525,000 barrels per day (bpd) refinery at Onsan.

The capacity of the plant was increased in 1994 to 525,000 bpd from 325,000 bpd in 1994, and a $1.2 billion facility to convert heavy oil residue into higher value products was completed in 1997.

Saudi Aramco is a leading foreign investor in South Korea, and the S-Oil refinery sources at least 70 per cent of its crude oil needs from the Kingdom, thus virtually guaranteeing a ready market for Saudi oil.

S-Oil has recently shut down a 93,000 bpd crude distillation unit at Onsan.

Earlier this year S-Oil said that it was buying its own shares in the Seoul Stock Exchange to push up its stock value following an undervaluing of the stock.