Taking the Saudi-Korean partnership to new horizon

KOTRA Express talks to Fahad A. Al-Sahali, Representative Director of Aramco Asia Korea Limited, to hear more about Korea’s oil industry and his experience doing business here.

Saudi Aramco is the national petroleum and natural gas company of the Kingdom of Saudi Arabia based in Dhahran, Saudi Arabia. Through its 80-year history, it has become one of the largest companies in the world by revenue.

Over the years, Saudi Aramco has maintained a base for longstanding commercial and industrial ties with Korean companies with businesses in Saudi Arabia. With the mission to support these ties and signify its global importance at the heart of some of the world’s largest and fastest growing economies, the company established operations in South Korea in 2012 as Aramco Asia Korea Limited (hereinafter referred to as Aramco Korea).

Fahad A. Al-Sahali is currently representative director of Aramco Korea. With a degree in chemical engineering, his previous career experience consists of working as a Ras Tanura Refinery process engineer, and then as a Ras Tanura Refinery operations coordinator managing the manufacturing planning and economics in the refinery. Later on, he was nominated to be a part of the setup and commercial team in the Saudi Aramco & TOTAL Refining and Petrochemical project (SATORP). As a joint venture manager, he has handled various Saudi Aramco investments with international partners such as TOTAL, Exxon Mobil, Sinopec and Shell, focusing on the best interest and alignment between stakeholders. He contributed significantly in increasing the refining capacity of Saudi Aramco and the growth of its joint ventures domestically and internationally. Throughout his career, Al-Sahali has led many cross functional teams in business development and commercial discussions especially during his appointment as director of Aramco Asia Portfolio Management.

KOTRA Express sat down with Al-Sahali to hear more about Korea’s oil industry and his experience doing business here.

Please tell us about the business Saudi Aramco operates.

Over the past eight decades, Saudi Aramco has evolved to become the world’s largest integrated oil and gas company. We manage Saudi Arabia’s proved reserves of 257 billion barrels of oil equivalent as of 2018.

In upstream, our goal is to maintain our position as a world-leading crude oil producer and the lowest-cost producer, while providing reliable crude oil supply to customers. We are producing approximately one in every eight barrels of crude oil globally. In the first half of 2019, we maintained our total hydrocarbon production of 13.2 million barrels of oil equivalent per day and an average daily crude production of 10 million barrels per day (bpd).

In downstream, our aim is to further diversify our operations, growing and optimizing the performance of our business and increasing the proportion of petrochemicals production, capturing incremental margin in the hydrocarbon value chain. The Company’s refining gross throughput stood at 4.6 million bpd in the first half of 2019.

What made Saudi Aramco establish a branch in Asia and particularly, in Korea? What are the advantages of doing business here?

The Asian economies represent one of the fastest growing regions for our products. Our expansion in Asia demonstrates our long-term commitment to the region’s energy security taking into account the world’s need for more adequate, reliable, affordable and cleaner energy. Bearing that in mind, we are actively taking steps to create a fully integrated business across the entire hydrocarbon value chain.

Korea in particular is an attractive investment location for us because of its thriving business ecosystem, excellent scientific R&D and infrastructure, and a highly educated and talented workforce. Over the past few decades, Korea has played an important role in the development and growth of Saudi Arabia and Saudi Aramco. Considering the importance of Korea, it’s natural that we stand by Korea as a reliable source of energy to fuel its rapid growth.

What are some of the main business sectors of Korea that Aramco Korea focuses on?

We have been a growing force in the local energy services market by providing a wide range of services for both Saudi Aramco and its Korean partner companies. Our role is to bolster Saudi Aramco’s long-term commitment to the Korean crude oil and liquefied petroleum gas (LPG) markets.

Our activities include strengthening the relationship between Saudi Aramco and its Korean customers and partners, searching for new technologies and business opportunities, and capitalizing on Korea’s manufacturing competitiveness to achieve Saudi Aramco’s strategic sourcing objectives.

With Aramco Overseas Company being a major shareholder in S-OIL which is South Korea’s third-largest refiner, Saudi Aramco just celebrated the inauguration of a new Residue Upgrading Complex and Olefin Downstream Complex in addition to signing an MOU to collaborate on a USD 6 billion Steam Cracker & Olefin Downstream Project.

Our focus is well manifested on the recent various MOUs and agreements worth billions of dollars that Saudi Aramco signed during the royal visit of HRH Prince Mohammed bin Salman, Crown Prince, Deputy Prime Minister, and Minister of Defense of Saudi Arabia in June 2019 with major partners including Hyundai Motor Company, Hyundai Heavy Industries Holdings, Hyundai Oilbank, Korea National Oil Corporation, Hyosung Group, GS Holdings and Daelim Industrial.

What are the growth strategies that Saudi Aramco has when it comes to doing business globally and in Korea?

While strengthening its position as one of the world’s leading energy companies, Saudi Aramco also spared no efforts in elevating the downstream business to the level we have created for upstream. Our ultimate target of 8-10 million bpd of integrated refining and marketing capacity will create a better balance between upstream and downstream segments. An even more exciting part of our downstream strategy is our future chemicals business, which we believe will enhance our position as a leading integrated energy company.

We hold an ambitious downstream growth strategy in Asia, particularly the Korean market. Out of many, the share purchase agreement between Saudi Aramco and Hyundai Heavy Industries Holdings to acquire stakes in Hyundai Oilbank as well as the aforementioned expansion of S-OIL and the various MOUs and agreements signed with major Korean companies are recent examples of alignment with our global downstream strategy.

We also have plans to attract Korean companies to invest in Saudi Arabia through our in-Kingdom Total Value Add (IKTVA) program which is aligned with “Saudi Vision 2030” aiming to increase foreign direct investment into the Kingdom. Examples are our efforts with Hyundai Heavy Industries and other partners to establish a world-class maritime yard within the King Salman International Complex for Maritime Industries and Services in Saudi Arabia, as well as the recent MOU signed with the SeAH group for collaboration in specialty steel value chain developments in the Kingdom of Saudi Arabia.

It’s well known that Aramco Korea is active in conducting citizenship programs in Korea. Could you please elaborate on the rationale of your philanthropic programs?

For us, being a good corporate citizen means more than just doing well. Instead, it means acting with a purpose in mobilizing our resources to generate opportunities that help make a positive impact on the environment, people and their communities.

Some of our recent endeavors include support for a wide range of citizenship activities, including scholarships for talented university students with disabilities majoring in engineering, science and technology; full support for the design and construction work for a renewable energy themed playground at the Seoul Energy Dream Center; support for the installation of Aramco Hope Tree, the solar-powered street lights; and donation for the installation of solar power generation systems at local welfare facilities. Giving back to communities where we operate is in our DNA.