With second plant open, No. 4 refiner looks to IPO

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With second plant open, No. 4 refiner looks to IPO

Hyundai Oilbank is expanding its role in the oil industry as it begins production at its second BTX plan and prepares for an initial public offering (IPO).

The new BTX (benzene, toluene and xylene isomer) plant in Daesan, South Chungcheong, opened last week with a capacity of 100 tons of petrochemical materials a year.

Korea’s oil refiners, in general, performed poorly last year. According to filings on the Financial Supervisory Service’s Data Analysis, Retrieval and Transfer System (DART) and industry sources, the nation’s fourth-largest refiner posted operating profit of 307.2 billion won ($271 million) last year, a drop of 48.3 percent from a year earlier.

Nonetheless, Oilbank turned was the most profitable company in Korean oil industry. SK Innovation, the nation’s largest refiner and three times larger than Oilbank, posted profit of 279.1 billion won. No. 2 GS Caltex and No. 3 S-Oil posted losses of 508.5 billion won and 347.3 billion won, respectively.

Oilbank partnered with Japan’s Cosmo Oil to build the BTX facility at a cost of 530 billion won and started design of the plant in April 2011. Usually, it takes about 26 months to begin commercial production, but Hyundai Oilbank said it finished five months earlier than that.

With the addition of a second BTX plant, Oilbank can produce a total of 150 tons of petrochemical products a year. The company said petrochemical product sales will account 14 percent of total sales, up 5 percentage points, and generate 1 trillion won in revenue.

“Completion of plant diversifies our revenue sources that have been focused on refinery areas,” said Oilbank CEO Kwon Oh-Gap. “We will conduct our new businesses such as base oil and propylene materials successfully to become integrated energy company.”

Industry insiders predict Oilbank’s recent steps will lead to a successful IPO, which is expected to occur in September. The company planned to be listed on the stock market last year, but was sidetracked by the financial crisis in Europe. It officially scrapped the IPO plan last June.

According to industry estimates, the company’s IPO price could be about 1.5 trillion won to 2 trillion won, which is expected to be the largest IPO this year.

By Joo Kyung-don [kjoo@joongang.co.kr]

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