Saudi Arabia’s state oil firm is on a hiring spree in South Korea, as the world’s top crude exporter seeks engineers to run plants in its soaring refining sector – setting it on course to compete with some Asian countries that are big oil buyers.
Technicians from South Korea are an obvious target given parts of its refining sector are struggling and the two countries also have long-established business ties across a range of areas including refining.
But Asia has established itself as the world’s biggest refining region and so Saudi moves to become a major refiner are set to increase competition with countries such as India that also refine Saudi crude to supply Europe.
Having little prior experience in refining, state oil firm Saudi Aramco is trying to lure experienced engineers and technicians from South Korea with generous expatriate packages.
“Working in Aramco has three benefits – salary, kids’ education at an international school and career development to work at global companies in the United States and Europe,” said a South Korean engineer who is about to move to Saudi Arabia after working seven years for a major domestic refiner.
The engineer – who declined to be identified due to contractual clauses – will initially live in the oil hub of Ras Tanura where there are gated compounds for foreigners.
Saudi Aramco did not reply to an email requesting comment but industry sources say that it has taken on more than 100 South Koreans since last year.
Energy Resourcing Korea, the recruiting agency Saudi Aramco uses, has about 100 jobs listed on its site for posts such as refining engineers, chemical engineers and technicians.
South Korean technicians are generally not as well paid as Western counterparts, recruitment data shows, and the advertisements have had more than 4,000 hits since they were posted on April 30.
Illustrating the pressure some Asia’s firms are under, SK Innovation Co Ltd, which owns South Korean refiner SK Energy and employs about 6,500 workers, recently offered an early retirement programme for the first time in 18 years after suffering its first operating loss in decades.
“As our refiners are reducing the size of their work force, this could be the best time to recruit,” said Jeon Jae-wan, a research fellow at the Korea Institute for Industrial Economics & Trade.
Saudi Arabia and its Gulf allies have led OPEC’s policy of maintaining high crude output in a bid to drive out competition from rivals such as U.S. shale oil.
It is also at the forefront of plans for the Middle East to become the world’s biggest refining region within three years.
Saudi Aramco said its downstream investments would exceed $100 billion over the next decade, targeting a refining capacity of between 8 million and 10 million barrels a day in coming years, or more than a tenth of global capacity.
“Over time, the Asian economies will likely absorb their share of new supply,” said Thomas Hilboldt, head of oil, gas and petrochemical research for Asia-Pacific at HSBC, adding that global product flow changes had already led to refinery closures in Japan and Australia.
Sushant Gupta, director for Asia-Pacific Refining at consultant Wood Mackenzie, said direct competition with business partners such as South Korea should, at least initially, be limited by Saudi Arabia matching its Asian fuel flows with shortages.
“Most of their product will be diesel to Europe because Asia is already in surplus of diesel, and by sending crude and gasoline to Asia, of which it is short, they actually support the many partnerships they have across the region,” said Gupta.
Saudi Arabia already has close ties with South Korea. Saudi Aramco is a major shareholder in the country’s third-biggest refiner S-Oil Corp and is South Korea’s top crude supplier.
Korean firms have also long been involved in big construction projects and Seoul has agreed to cooperate on developing nuclear power in the kingdom.
Saudi Aramco’s board met in Seoul in April, while a road in a refinery complex in South Korea has even been named after veteran Saudi oil minister Ali al-Naimi.