South Korea, Saudi sign $8bn economic co-operation pact

South Korea and Saudi Arabia signed an $8.3 billion economic co-operation pact yesterday during Crown Prince Mohammed bin Salman’s first visit to Seoul. Saudi Arabia is resource-poor Seoul’s biggest oil supplier and most of the agreement is accounted for by a $6 billion deal between oil giant Saudi Aramco and Korean firm S-Oil to build refinery and downstream facilities in South Korea.

A giant banner welcoming the crown prince was hung on the Seoul headquarters of S-Oil, South Korea’s third-biggest refiner, which is majority owned by Saudi Aramco. Saudi Arabia is South Korea’s “biggest construction market overseas, the largest investor in the country among countries in the Middle East and also the biggest trading parter in the region,” President Moon Jae-in said at a meeting with Prince Mohammed.

Prince Mohammed visited Pakistan, India and China in February and is scheduled in Japan later this week to attend the G20 summit in Osaka. The economic pact also involved several other deals between Saudi Aramco and Korean firms, including Korea National Oil Corporation, Hyundai Heavy Industries and carmaker Hyundai Motor. The crown prince also met with the heads of the country’s biggest conglomerates, including Samsung heir Lee Jae-yong.

Prince Mohammed aims to diversify his country’s heavily oil-dependent economy and to sell up to five percent of Saudi Aramco --the world’s largest energy firm. Proceeds from the sale -- which aims to raise up to $100 billion -- will help create the world’s biggest government investment fund, whose profits could provide an alternative to oil revenues.