Expansion in Asia is central to Saudi Aramco’s strategy: Fitch

Saudi Aramco’s decision to buy a 19.9 percent stake in South Korea's Hyundai Oilbank is aligned with its long-term strategy to defend and expand market share in an increasingly competitive Asia crude oil market, Fitch Solutions said in a report on Thursday.

The deal solidifies Aramco’s status as the leading crude supplier to the world's fifth largest crude market, and adds to its existing 63.4 percent stake in another South Korean refiner S-Oil, the report added.

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South Korea’s role as a key global, regional fuel refining and export hub will prove highly valuable to Saudi Aramco seeking new growth opportunities, Fitch Solutions said.

It further said Aramco would gain greater stakes in South Korea's refineries, which are among the most sophisticated in the world and is well-equipped to sustain robust exports to global, regional markets in the face of stricter environmental regulations and evolving demand towards low-sulphur, cleaner fuels.

Predating its purchase of Hyundai Oilbank stakes, Aramco had already been making inroads to a number of key Asian markets over the past few years, both through purchasing stakes in refineries or partaking in the development of greenfield upstream projects, Fitch Solutions said.

“We believe now is an opportune time for Saudi Aramco to further strengthen its presence in Asia, supported by the positive demand growth outlook for the region and the struggles faced by its main competitors,” it added.