ABU DHABI - Investment In South Korea.

Under a deal finally approved in late 1999, IPIC bought a 50% stake in South Korea's third largest oil refining and retail firm - Hyundai Oil - with a market share of 21%. Having paid a mere $510m for the equity, IPIC got four of the company's seven board seats. Now ADNOC supplies a major part of Hyundai Oil's crude oil requirements.

In late 2001, it was said that Hyundai oil had a 665,000 b/d oil refining capacity - with Hyundai in 1999 having already owned a 390,000 b/d refinery and many stations - plus 2,350 petrol stations and a 1,500 MW power plant. (The biggest refiners in South Korea are LG-Caltex and Ssangyong Oil. Ssangyong is partly owned by Saudi Aramco). Under a merger sanctioned in late 1998 by Seoul, Hyundai Oil had acquired from heavily indebted Hanwha Energy a 275,000 b/d refinery at Inchon, its petrol stations and its power plant.

In November 2004, however, China's state-owned Sinochem said it had acquired the 275,000 b/d Inchon refinery and that its deal had been cleared by Beijing. But last month it was said that creditors and receivers had blocked the acquisition and that they were to meet again this month to try to resolve the sale.

The press reported in late 1999 that the IPIC money was paid to buy new shares in the enlarged Hyundai Oil, which was said to have also acquired a debt worth about $2.5 bn. It was said Hyundai used the money to lower its debt-to-equity ratio to 1.1 by end-1999. IPIC was reportedly encouraged by the drop in the value of Korean oil assets, and by Seoul's abolition of a ceiling on foreign ownership of refining, oil retail business and power plants.