The nation’s two leading oil refineries are competiting over a stake in Australian petrol retailer and supplier United Petroleum, according to industry sources.

Following the confirmation of Saudi Aramco-invested S-Oil last week, SK Innovation said on Monday that SK Energy, its refinery arm, was considering the acquisition of a stake in United Petroleum.

“The move is part of the firm’s continued efforts to tap business opportunities overseas,” SK Innovation, the nation’s top refinery, said in a regulatory filing to the stock market authorities.

The public relations officials of SK Innovation and S-Oil declined to give any additional details on their bid.

According to industry sources, both companies are in a preliminary bid for a stake in United Petroleum and waiting for the announcement of a shortlist before the year’s end.

The size of the deal is expected to hover around 1 trillion won ($942 million) and two or three other global energy companies allegedly are in competition to seal a stake acquisition deal with the Australian firm.

“The reason why the two refineries jumped into a bid to enter the Australian patrol supply market is because of growing exports of their oil products to Australia,” said Hwang Yoo-sik, an analyst at Meritz Securities.

“Australia is expected to increase its imports of oil products as its refinery facilities are aging.”

According to data from the Korea Petroleum Association, the share of oil product exports to Australia of total exports jumped to 5.7 percent last year from .57 percent in 2008.

S-Oil, the nation’s third-largest refinery, tops in oil product exports to Australia, taking about 66 percent of total exports to the country as of last year, the association said.

“The rising demand for oil product imports in Australia is appealing to local oil product exporters which face falling outbound demand amid the protracted global economic downturn,” Hwang said.

The profitability of SK Innovation and S-Oil plunged in the third quarter on-year due to a fall in their refining margins and in exports.

Their net profit fell 26.9 percent and 55.5 percent, respectively, in the July-September period compared with the same period last year.

S-Oil’s poorer performance compered to that of SK Innovation is because of its high dependency on its core refinery business. SK Innovation, the holding company of the nation’s top refiner SK Energy, has sought business diversification ranging from electric car batteries to materials.

Industry watchers said local refineries would step up efforts to spot new business opportunities beyond their core businesses more aggressively next year to improve their profitability.

By Seo Jee-yeon  (jyseo@heraldcorp.com)