Industry sources say that HDO is under financial pressure due to growing domestic competition among refiners and the high prices of crude in global markets. IPIC holds 50 per cent of the shares in HDO.

‘It [the credit] will not be a direct financial investment. IPIC will provide credit for crude oil imported from ADNOC[ Abu Dhabi National Oil Company]under term contracts, furnish letters of guarantee to banks who provide loans to HDO and related financial measures,’ says one industry source.

In late 1999, the board of directors of IPIC and HDO approved the takeover of a 50 per cent stake in the Korean refiner by IPIC. The deal was valued at $510 million and included increasing HDO’s offtake of crude oil from ADNOC (MEED 29:10:00).

HDO has an installed capacity to refine 665,000 barrels a day of crude oil, which is supplied to more than 2,000 petrol stations in South Korea.