Hyundai Oilbank to sell fuels to Hawaii in first term deal with US

South Korean refiner Hyundai Oilbank Co. is set to export gasoline and diesel to Hawaii next year through its first term contract to sell petroleum products to the US.

Hyundai Oilbank agreed to ship 3.6 million barrels of the transportation fuels to the state for one year starting from January, according to a company statement on Dec. 28. The refiner did not provide a breakdown of the export volume of gasoline and diesel.

A term supply contract allows refiners to sell fuels at specific fixed conditions such as prices for a certain period, especially one year or more.

In July, Hyundai Oilbank signed its first spot deal to sell gasoline to Hawaii. Hawaii can secure better stability and economics by importing fuels from Asia since it is located in the Pacific Ocean.

TARGETS MORE SPOT CONTRACTS

Hyundai Oilbank expected the latest term contract to secure Hawaii’s local fuel market and help make inroads into the US mainland.

“US fuel prices often surge when natural disasters such as a cold snap, as well as accident hit refinery operations in Texas and other regions. We will seek spot deals to take advantage of fuel supply shortage there,” said a Hyundai Oilbank source.

The refiner has been exporting refined products such as diesel and naphtha in the Asia Pacific through term contracts. But the company is diversifying overseas markets as exports to China have been declining with refiners in the mainland raising production capacity to meet growing local demand.

Hyundai Oilbank aims to expand its presence in Australia where closures of refineries cut supply as the industry suffered from tumbling demand due to the COVID-19. BP plc. shut its Kwinana plant in Western Australia, while Exxon Mobile Corp. earlier this year announced a plan to close its Altona plant in Victoria.

Write to Jeong Min Nam at peux@hankyung.com
Jongwoo Cheon edited this article.