State-owned oil major Saudi Aramco has confirmed reports that it is to become the majority stakeholder in South Korea’s S-Oil in a deal worth $2bn.

Aramco will buy South Korea-based Hanjin Energy’s 28.4 per cent stake in the refinery to add to its existing 34.9 per cent stake. Korean Air owns 96.6 per cent of Hanjin Energy. The deal is being carried out by the Aramco Overseas Company (AOC) which is the subsidiary of Saudi Aramco that deals with its overseas operations.

“This transaction underscores Saudi Aramco’s confidence in the Korean economy and its strategy to enhance its presence in the growing Asian markets,” Saudi Aramco chief executive, Khalid al-Falih, said in a statement.

The S-Oil refinery is one of the largest in the world, with a capacity of 580,000 barrels a day (b/d) and facilities that produce lube oil and petrochemicals. It has been in operation since 1976, but Aramco did not acquire a stake until 1992.

After the transaction, which is subject to regulatory approval, Aramco’s shareholding in the refinery will increase to 63.4 per cent.

The majority of Aramco’s refining operations are domestic, but the oil major does own shares in refineries located in several countries. These include the US, Japan and China, as well as South Korea.