Saudi Aramco is reportedly planning to acquire a 19.9% interest in South Korean refiner Hyundai Oilbank from Hyundai Heavy Industries Holdings for a $1.6bn consideration.

The proposed transaction will offer the state-owned company greater presence in South Korea, which is one of the firm’s biggest buyers of crude oil in Asia, Reuters reported.

Aramco already owns a 63.41% majority shareholding in South Korean refiner S-Oil.

The stake acquisition in Hyundai Oilbank is expected to increase Aramco’s crude oil sales to S-Oil.

The deal comes at a time when Aramco is looking to expand its market share in Asian markets such as China, India, Malaysia and Indonesia, as well as Africa.

“Saudi Aramco seems to be boosting investments in downstream projects ahead of an initial public offering.”

An unidentified Hyundai Heavy Industries Holdings spokesperson told Bloomberg that the parties will conduct board meetings next month to seek approval for the deal.

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The company expects to close the transaction by the end of this year. According to the transaction, Aramco will pay KRW36,000 ($32.15) a share for the acquisition.

Kiwoom Securities analyst Lee Dong-Wook was quoted by Reuters as saying: “Saudi Aramco seems to be boosting investments in downstream projects ahead of an initial public offering.”

Aramco is now planning to undertake the public listing by 2021.

Saudi Arabia is a major supplier of crude oil to South Korea, which imported 323.17 million barrels of crude from the kingdom last year.

Saudi Aramco aims to increase investment in refining and petrochemicals as it moves to reduce its dependence on crude.

Proceeds from the sale will be used by Hyundai Heavy Industries to boost its financial health and for investment in new businesses.