South Korea's Hyundai Oilbank files for IPO to fund energy transition

South Korean refiner Hyundai Oilbank has filed for an initial public offering with a local bourse operator to help raise funds for investing in cleaner eco-friendly businesses as part of its move to accelerate energy transition, a company official said Dec. 14.

Concomitantly, Hyundai Oilbank plans to trim its mainstream refining business as the impetus shifts on sustainability, with the company already embarking on plans to expand its hydrogen footprint.

"The company plans to reduce its mainstream oil refining business to 45% of its total revenues by 2030, from 85% currently," the company official said.

This comes at a time when South Korea is preparing for a smaller refining footprint as it targets achieving carbon neutrality by 2050. South Korea is forecast to produce around 860 million barrels of oil products in 2021, down 2% from 2020, according to multiple South Korean fuel marketers and refinery sources surveyed, S&P Global Platts reported earlier.

Company's IPO plans

"The company aims to trade its shares on the main KOSPI market in the first half of 2022," the official said.

The filing comes nearly three years after Hyundai Oilbank's aborted IPO bid in late 2018. At that time, Hyundai Oilbank scrapped its IPO bid in the wake of a deal by Hyundai Heavy Industries to sell a 17% stake in Hyundai Oilbank to Saudi Aramco in January 2019 for $1.24 billion.

Hyundai Oilbank's renewed IPO bid was largely driven by improved refining margins with rising oil prices as well as the refiner's bid to diversify its business portfolio into hydrogen and renewable sources.

Just before its application for the IPO, Hyundai Oilbank last week agreed to sell an undisclosed stake to US software company Palantir Technologies for $20 million. The refiner did not provide further details, citing a confidentiality agreement.

Palantir Technologies, a public company specializing in big data analytics, said it has decided to invest in Hyundai Oilbank as it has assessed the possible growth of petrochemicals and hydrogen business.

Hyundai Oilbank also sold a 90% stake in its fully-owned oil storage terminal on the country's southeast coast in July to help fund its hydrogen-focused green energy projects.

Hyundai Oilbank is currently owned 74.13% by Hyundai Heavy Industries Holdings, which runs South Korea's top shipbuilder Hyundai Heavy Industries, while Saudi Aramco holds a 17% stake as the second-biggest shareholder.

Hydrogen thrust

In August, Hyundai Oilbank decided to produce separators for fuel cells and develop other essential parts to expand its hydrogen portfolio in line with its strategy to transition from oil refining to green business.

The separator is a key component of a hydrogen fuel cell stack, which is assembled by stacking hundreds of unit cells composed of cathodes and anodes.

The company has also been working together with the country's biggest automaker Hyundai Motor for developing fuel cell separators suited for its hydrogen-powered fuel cell vehicles.

Hyundai Oilbank has just started to produce 3,000 kg/day of "high-purity" hydrogen for hydrogen-powered fuel cell vehicles, using carbon dioxide produced by the refiner as feedstock for hydrogen.

The company has set a goal to produce 100,000 mt/year of blue hydrogen by 2025. Blue hydrogen refers to hydrogen produced from fossil fuel in a process that captures carbon dioxide emissions.

It also plans to establish 180 hydrogen fueling stations by 2030 to provide infrastructure for hydrogen mobility.

In April this year, Hyundai Oilbank signed a memorandum of understanding with US hydrogen giant Air Products & Chemicals to use its technology to produce hydrogen from its crude oil byproducts and natural gas.