S-Oil secures 20 years of crude from Saudi Aramco

Korean oil refiner S-Oil said yesterday it has signed a long-term contract with Saudi Aramco that will ensure a stable crude supply for the next 20 years.

“The crude supply contract with the world’s largest oil company at a time of serious volatility in the market will ensure stability in our refinery operations,” S-Oil said in a statement after the deal was reached in Saudi Arabia.

The total amount of crude to be brought into the country is expected to meet S-Oil’s entire crude oil refining volume capacity for the next two decades.

The refiner can process 669,000 barrels of crude per day, with Saudi Aramco to supply around 230 million barrels per year. The total is equivalent to 30 percent of Korea’s petroleum product consumption and could enhance its energy security.

The company also said the long-term contract with the state-owned company is highly unusual in the market, where one-year supply contracts are the norm.

It claimed that such a deal was possible because of the mutual trust built up between the two companies and the strong ties forged between Seoul and Riyadh. Saudi Aramco holds a 35 percent stake in S-Oil, making it the company’s single largest shareholder.

Saudi Arabia is the world’s largest oil producing country with crude reserves amounting to 260 billion barrels. It exerts considerable influence in the global market with a production capacity of 12 million barrels of crude a day, or 11 percent of the total global output. Yonhap