S Korea’s S-Oil, Saudi Aramco sign 20-year crude supply contract

09 February 2012 08:09  [Source: ICIS news]

SINGAPORE (ICIS)--S-Oil said on Thursday it has signed a 20-year crude oil supply contract with Saudi Aramco as the South Korean refiner and aromatics producer seeks to secure supplies amid “serious volatility” in the oil market.

The supply contract, which was signed on 8 February, will enable S-oil to secure a stable supply of the crude volume required to run its refinery operations for the next 20 years, the company said in a statement.

Saudi Aramco, Saudi Arabias state oil company, owns a 35% stake in S-Oil.

“A crude supply contract from the worlds largest oil producing country at a time of serious volatility in the market [because of] an embargo against Iranian crude and threats to block the Straits of Hormuz will ensure stability in the companys refinery operations, an S-Oil company official added.

The crude supply contract is “highly unusual” in the market where a year-long supply contract is the norm, according to S-Oil.

S-Oil’s refining capacity is 669,000 bbl/day and Saudi Aramco’s total annual supply volume to S-Oil is around 230m barrels, the South Korean firm added.

Saudi Arabia has crude reserves amounting to 260bn barrels and has a daily production capacity of 12m barrels, which is equivalent to 11% of the total global crude output, according to S-Oil.

Financial details of the supply contract were not disclosed.

By: Nurluqman Suratman

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