South Korea’s fourth-largest refinery, Hyundai Oilbank, said this week that it would invest 3 trillion won ($2.9 billion) for new businesses, mainly in nonrefining sectors, in an attempt to diversify its business portfolio.

The firm pledged to make a departure from its traditional business areas by aggressively entering new sectors such as propylene derivatives and carbon black as well as expanding overseas investment on energy business.

“When the new business gets into its stride, the portion of sales made up by the oil refining business will fall 30 percent by 2020,” said Hyundai Oilbank CEO Kwon Oh-gap while unveiling the company’s mid- and long-term plan during an event to mark the company’s 50th anniversary, which fell on Monday.

With the plan, the company joins other petroleum players that are seeking out new business models to tide over the longstanding downturn in the oil market, as the sale of petroleum products no longer ensures competitiveness in the increasingly saturated industry.

Based on the new business portfolios, Hyundai Oilbank is aiming for annual sales of around 50 trillion won, which is more than double last year’s tally of 20 trillion won, by 2020, with a target operating profit of 2 trillion won. The firm also hopes to reduce its sales reliance on oil refining to 60 percent from current 93 percent.

The company has been under negotiations with petrochemical and steel firms, including Hyundai Steel, to jointly nurture its propylene derivatives and carbon black business.

Carbon black is a raw material produced by the incomplete combustion of heavy petroleum products. It is used as a reinforcing filler in tires and color pigment for inks and paints. Propylene derivatives are materials that are created by synthesizing byproducts produced while refining crude oil.

In 2010, Hyundai Oil Bank jointly entered the lubricant market with Shell Petroleum. It also moved into the oil storage business by constructing a site to store oil and petrochemical products at Ulsan harbor in a bid to become a regional fuel distributor.

The company is currently working on a master plan for a plant for a joint-venture petrochemical firm with Lotte Chemical, which is expected to produce 110,000 barrels of condensates and 100 tons of light naphtha and blended xylene per year when it begins running in the second half of 2016.

By Park Han-na (hnpark@heraldcorp.com)