Could Hyundai Oilbank Come Strong under Wing of HHI?

HHI acquires Hyundai Oilbank; former HHI vice president takes helm at the refinery

Hyundai Heavy Industries (HHI) Vice President Kwon Oh-gap took office as president and chief executive officer of Hyundai Oilbank on Aug. 16, replacing Seo Young-tae, who had the helm at the refinery for eight years.
Kwon’s appointment as the CEO of Hyundai Oilbank followed the regaining of control of the refinery by HHI after a long-running dispute over its management rights with the International Petroleum Investment Co. (IPIC), a state-run company of the United Arab Emirates. HHI said in a statement on Aug. 19 that it acquired a 70 percent stake in Hyundai Oilbank from Hanocal Holdings and IPIC International.
Hyundai Oilbank, a subsidiary of the Hyundai Business Group, first entered the oil refining market in 1993 when it acquired the nation’s first private oil refining company, Kukdong Oil Refining, established in 1964. The refinery was handed over to Hanwha Energy in 1999, which disposed of its stakes to IPIC in 2002.
Hyundai’s acquisition of Hyundai Oilbank is expected to bring about significant implications to the domestic refining and petrochemical industries. In particular, Kwon’s appointment as Hyundai Oilbank CEO may foretell tremendous changes in the industry. As Kwon has worked such divisions of Hyundai Heavy Industries as Plant Business Division, Seoul Business Division, Export and Import Business Division, Management Support Division and Seoul branch office chief, he is expected to strengthen the presence Hyundai Oilbank has made for itself in the petrochemical industry as a new growth engine. The domestic refining industry is also forecast to stage a fierce competition as Hyundai Oilbank, now ranked the nation’s fourth largest refinery, is expected to launch extensive marketing campaigns by teaming up with such companies as Hyundai Card to up its market share.
Kwon sent an e-mail message to his executives and staff members upon his inauguration, saying, “I’m very happy to strive for a new take-off as a member of the HHI group, the world’s leading company in the heavy industries sector.”
He told reporters he will do his best in maximizing synergetic effects with HHI.
The e-mail message continued, “My conviction is that those who work hard should be respected and compensated. Let’s devote ourselves to making Hyundai Oilbank a company with the highest competitive edge and the most coveted working place.”
In the message, Kwon told the personnel management department to work out ways of innovating how the company is operated, including compensations. He made it clear that he will create a performance-based corporate culture, not relying on nepotism based on school connections and regionalism.
Kwon indicated a focus on the chemistry of officials who have worked in the different corporate cultures of various predecessors, including Kukdong Oil, Hanwha Energy and IPIC, saying that factional strife will not be tolerated.
He expects Hyundai Oilbank to see its competitiveness surge in the first half of 2011 when an expansion of facilities for transforming oil products into value-added ones is to be dedicated. He noted that Hyundai Oilbank now falls behind in terms of capacity of changing oil products into value-added ones, but it will strive to maximize its profits through the upcoming expansion, which could give it a competitive edge through synergetic effects with the subsidiaries of Hyundai Heavy Industries Group.
Kwon toured the Daesan Plant in Chungcheongnam-do and the regional headquarters on Aug. 18 when he began his career as the new Hyundai Oilbank CEO. nw

(From left) A view of Hyundai Oilbank refinery in Seosan, South Chungcheong Province.; Kwon Oh-gap, who has taken the helm at Hyundai Oilbank, which was recently acquired by Hyundai Heavy Industries.