S-OIL signs 20-year long-term crude supply contract with Saudi Aramco

● Long-term crude supply contract amid volatile international oil market will contribute to stable oil security of Korea
● S-OIL to secure crude required for its refinery operation from Saudi Arabia, the world’s largest oil producing country

S-OIL said that it signed 20-year long-term crude supply contract on Feb. 8th (Saudi local time) with Saudi Aramco, the state-owned oil company of Saudi Arabia, in Dhahran, Saudi Arabia.

The supply contract will enable S-OIL to secure stable supply of the entire crude volume required to run its refinery for the next 20 years. 

20-year long-term crude supply contract is highly unusual in the market where one-year supply contract is the norm, which indicates that it would not have been possible had it not been for the mutual trust built between the two companies for a span of more than 20 years and the strong friendship between Korea and Saudi Arabia.

An official at S-OIL said “Crude supply contract from the world’s largest oil producing country at a time of serious volatility in the market due to embargo against Iran crude and threats to block Straits of Hormuz will ensure stability in the Company’s refinery operation.”

S-OIL’s daily refining capacity is 669,000 B/D and Saudi Aramco’s total annual supply volume to S-OIL is approximately 230 million barrels in respect of the refiner’s production size. This is equivalent to 30% of total consumption of petroleum products in Korea and will be highly conducive to Korea’s energy security.

Saudi Arabia is the world’s largest oil producing country with crude reserves amounting to 260 billion barrels. It enjoys absolute influence in the global market with producing capacity of 12 million barrels of crude a day, which is equivalent to 11% of total global crude output.

Saudi Aramco, Saudi Arabia’s state oil company, is the world’s largest oil company overseeing the entire oil-related business of the country.

Saudi Aramco has maintained long-term investment relations with S-OIL ever since it decided to invest in the Korean refiner in the form of a joint venture in 1991. The long-term investment by Saudi Aramco serves as the most ideal model of economic cooperation between an oil producing country and a consuming country, as well as symbol of strong ties between the two countries.