Experts informed that Saudi Arabia’s well-thought-out integrated expansion strategy is balancing sustainability concerns and advancing the Kingdom’s Vision 2030 economic diversification plan.
The state-owned giant Saudi Aramco, which is at the centre of Saudi Arabia’s energy sector change, has been concentrating on expanding cross-industry integration and opening up new markets.
According to analysts contacted by Arab News, Aramco is not only working to boost Saudi Arabia’s economy but is also creating innovative technology to support the country’s aspirational environmental objectives. These include a USD 1.5 billion fund established to finance the purchase of technology capable of reducing the need for fossil fuels, demonstrating the company’s dedication to lowering its carbon footprint and promoting energy efficiency.
Reaching a level of sustainable business that supports the company’s growth in a very complex business environment is one of the several features that Aramco is careful to achieve, aside from growth, according to Saudi economist Talat Hafiz, who spoke to Arab News. This is especially true in light of the changes in the global energy mix and the introduction of new energy alternatives like nuclear and renewable energies.
Hafiz underlined the value of the company’s diversification strategy, stating that, in light of Aramco’s track record of profitable local and foreign investments; the venture can “simply reduce the risks connected with any investments domestically or overseas.”
“Considering that Aramco is a diversified energy firm and not just an oil and gas producing corporation, Aramco’s expansion business strategy is deeply structured and thought out to generate value through exposing new market opportunities and creating an opportunity for further integration,” he continued.
Aramco Ventures, the company’s venture capital arm, is a key component of its global strategy. It recently received a USD 4 billion infusion to support the development of revolutionary technology.
This programme demonstrated Aramco’s commitment to portfolio diversification and global startup support, which is consistent with its long-term goals in digital technology, chemicals, and new energies.
“Aramco is a major participant locally and internationally in ensuring that its business is sustainable not only financially but also to help the Kingdom’s efforts to realise net-zero emissions goals by 2060,” Hafiz said, speaking about the company’s technical investments and sustainability initiatives.
Aramco has pledged to achieve carbon neutrality by the year 2050 and has since unveiled several programmes and projects.
Aramco’s strategy roadmap for the future calls for increasing market penetration, especially in North America and Asia, and it is utilising its venture capital division to support the development of innovative technology.
The company is “looking at the current market position which, while though challenging, gives an outstanding chance for expansion,” according to CEO Amin Nasser, who has said as much for a long time. This innovative method emphasised the strategic goal of establishing leadership in the international energy market.
Founded in the 1930s and taken over by the state in the 1980s, Aramco witnessed a significant increase in its worldwide reach in the 1990s.
The business strategically diversified outside its upstream activities by establishing downstream joint ventures in the US and South Korea, thereby securing its position as a major participant in the global energy markets.
The opening of Petro Rabigh, Aramco’s first petrochemical plant, in 2009, the establishment of Sadara Chemical Co. in 2011, and the inauguration of the SATORP and YASREF refineries in 2014 were significant turning points as we entered the twenty-first century.
The company’s global reach encompassed Europe, Asia, and the Americas, promoting partnerships and academic cooperation on sustainable energy solutions with global partners.
By 2018, Aramco had revealed its ambitious plan to acquire majority ownership in SABIC, turning it into a major worldwide producer of petrochemicals, and had accomplished notable milestones in the production of unconventional resources.
Recent transactions include the acquisition of a 40% equity share in Gas & Oil Pakistan, a 10% stake in a thermal engines joint venture between French automotive Renault and Chinese automaker Geely, and a 50% stake in the Jubail-based Blue Hydrogen Industrial Gases Co. Aramco has been eager to support Saudi Arabia’s other burgeoning industries in addition to oil.
Following a collaboration deal between real estate developers ROSHN Group and the firm, the Eastern Province’s Alkhobar will see the construction of a 47,000-capacity arena known as the Aramco Stadium.
In addition to providing sponsorship for the Esports World Cup, which took place in July 2024 in Riyadh, Aramco also set up an opulent simulator zone that allowed visitors to experience what it was like to drive a Formula 1 car.
Mahmoud Khairy, an economist and policy advisor, stated that Aramco and the Kingdom can pursue these projects since the firm generates “significant revenue” for the nation. The company’s diversification efforts are consistent with Saudi Arabia’s overall policies.
“Aramco’s investments in non-oil sectors, including petrochemicals, refining, and renewable energy, are designed to create a more diversified economic structure and reduce the Kingdom’s reliance on crude oil exports. This income allows the government to invest in various sectors, promoting a more balanced economic structure,” he continued.
The corporation is gaining from working with some of the sharpest minds on the planet in addition to financial incentives.
According to Khairy, Aramco has increased its worldwide footprint through strategic alliances and acquisitions abroad, and it has also given Saudi Arabia access to foreign knowledge and technology. Through knowledge transfer and best practices, these international collaborations support the Kingdom’s economic development.
Significant economic advantages have resulted from Aramco’s downstream expansion on a local and international level. According to Khairy, it has increased job creation in Saudi Arabia in industries like manufacturing and logistics, lowering unemployment and developing a trained labour force.
“Aramco supports industries around the world by securing steady supplies of petrochemicals and refined products. Its effective operations allow competitive pricing, benefiting customers worldwide and boosting economic efficiency,” he added.
“Providing tax credits or exemptions tailored to investments in renewable energy and clean technologies, subsidies, grants, and low-interest loans specifically designed for renewable energy projects can mitigate initial investment costs and promote quicker adoption of new technologies,” Khairy proposed about the financial and legislative incentives to support Aramco’s investment in clean energy technologies.
To lower risks and uncertainties, the expert says, regulatory support—such as feed-in tariffs, stable and transparent regulatory frameworks, and expedited permitting procedures—is crucial.
“Aramco is a major actor locally and internationally in ensuring that its company is sustainable not only financially but also to support the Kingdom’s efforts to reach net-zero emissions goals by 2060,” Hafiz said, emphasising the significance of Aramco’s commitment to sustainability.
He pointed out that Aramco has been announcing a lot of projects and activities since announcing its commitment to become carbon neutral by 2050.
Hafiz said, “Aramco is committed to investing in carbon capturing and blue and green hydrogen.”