Saudi Aramco beefs up venture capital arm to diversify from oil

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Saudi Aramco is beefing up its global venture capital arm with a $4bn cash injection as part of a wider push to diversify the kingdom’s oil-dependent economy.

The extra money for Aramco Ventures would more than double its capital to $7bn from $3bn, the state-run company said in a statement on Wednesday.

The cash will be deployed over the next four years with spending on sectors such as new energies, chemicals, transition materials and digital technologies to protect the Saudi economy when oil demand eventually starts to decline.

Saudi Arabia’s government owns more than 90 per cent of Saudi Aramco’s shares, with another 8 per cent held by the kingdom’s sovereign wealth fund, making it a vital cog in attempts to transform its economy.

The company, the world’s third-largest and the biggest oil producer responsible for almost 10 per cent of supplies, has committed to cut its operational emissions to net zero by 2050.

The venture capital arm, which manages three global and one domestic fund, has invested in companies that operate in sectors as wide-ranging as green steel production, artificial intelligence and blockchain technology.

“Innovation is key to addressing some of the fundamental challenges facing the world today, including the energy transition,” said Ahmad al-Khowaiter, Saudi Aramco’s executive vice-president of technology and innovation.

The additional capital “will provide crucial impetus to businesses at various stages of development around the world, while also contributing to Aramco’s own long-term objectives”, he added.

The company, with a market capitalisation of more than $2tn — only Microsoft and Apple are bigger — has also pledged to provide the “lowest-carbon” barrel of oil in the industry.

The capital injection to its venture capital arm comes as the world’s biggest oil producer grapples with subdued oil prices, which have failed to pick up despite deep production cuts by Opec+ last year.

The company’s net profit for the third quarter of 2023 was down 23 per cent compared with a year earlier, although it was above analysts’ expectations.

The kingdom in early January was forced to cut its official selling price for oil exports in February in what analysts called an attempt to remain competitive in the market.