Conglomerates compete over energy market

Three of Korea’s largest family-owned conglomerates are entering a heated competition over the lucrative petroleum market with Hyundai Heavy Industries’ recent takeover of the nation’s No. 4 refiner.

Hyundai Heavy Industries, the world’s largest shipbuilder, regained control of Hyundai Oilbank last week after Abu Dhabi’s state-run International Petroleum Investment Co. accepted the International Chamber of Commerce’s ruling that confirmed its right to acquire an additional 70 percent share.

Samsung Total Petrochemicals Co., backed by Korea’s largest conglomerate Samsung Group, is expanding its refinery business, posing a challenge to the current dominance of SK Energy, which belongs to the country’s third-largest conglomerate, SK Group. 

Hyundai Heavy Industries’ biggest shareholder is Rep. Chung Mong-joon of Grand National Party who is Hyundai Motor Group chairman Chung Mong-koo’s younger brother. 

Hyundai Heavy Industries sold controlling stakes in the refiner to IPIC in 1999 after suffering liquidity problems during the Asian financial crisis. 

Following the acquisition of Hyundai Oilbank, Hyundai Heavy Industries will move up a step to seventh place in conglomerate rankings by asset value. 

Hyundai Heavy Industries enters a market led by the country’s largest refiner SK Energy. In addition to SK Energy, SK Group also counts SK Gas, which holds the largest share of the liquefied petroleum gas market, among its subsidiaries.

While SK Group has a firm hold on the local energy market, Samsung Total is picking up pace.

In May, the company completed the largest single LPG storage facility and began importing the fuel from the Middle East. In addition, the company is planning a 160 billion won investment for related facilities as part of its plans to raise the proportion of its revenues raised from the area to 30 percent by 2015.