South Korea's third-largest refiner S-Oil Corp signed a long-term liquefied natural gas (LNG) supply contract with Malaysia's Petronas for 15 years starting from next year, the North Asia company said on Friday.
S-Oil expects to buy 700,000 tonnes of LNG per year from state-owned Petronas from March 2018 through March 2033, it said in a stock filing exchange.
"We have inked the deal on good terms for our company amid the current favourable LNG market conditions," said the refiner in the filing.
S-Oil, whose main shareholder is Saudi Aramco, declined to provide price details for the deal.
The refiner said in a separate statement the deal was part of its efforts to ensure stable supplies of LNG.
S-Oil plans to use LNG as fuel to run the refiner's plants and as a feedstock for petrochemical products.
The company said it will take fuel oil it had previously used to power its plants and use it to produce more expensive fuels such as gasoline, increasing profitability when its expanded facilities start operations in 2018, according to the statement.
S-Oil's expansion project is set to be completed in the first half of next year.
Under the project, the company is building a residual fuel oil upgrading system to produce higher quality oils, and an olefin production system that will churn out 405,000 tonnes of polypropylene a year, along with other high-value products.
S-Oil runs a 669,000 barrels-per-day refinery in Ulsan, southeast of Seoul.
(Reporting By Jane Chung and Joyce Lee; Editing by Richard Pullin and Tom Hogue)