The Slow Greening Of The World’s Biggest Oil Company

AMIN NASSER, the CEO of Saudi Aramco, declared this year that the age of fossil fuels is far from over. “Peak oil and gas is unlikely to come for some time, let alone 2030,” said Nasser. “We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately, reflecting realistic demand assumptions.”

He would say that. As the head of the world’s biggest oil company (ranked #3 on this year’s Forbes Global 2000 list, down one spot from last year on lower oil prices), Nasser oversees the production of more than 12 million barrels per day of oil and gas.

Aramco is such a behemoth that both its output and $117 billion in net income is more than three times higher even than ExxonMobil (down six spots to #14 on this year’s list). Chevron (#22, down four spots) looks like a comparative pipsqueak with merely $20 billion in profits last year. And Aramco isn’t going anywhere; with proven reserves of well over 200 billion barrels, it can keep that pace for decades to come.

So Nasser is biased. But the thing is, he’s not wrong. Renewable, zero-carbon energy is so far an addition, not a transition. For all the endless hype about the transition away from oil, gas and coal, the reality is that the world has never relied more on carbon-spewing energy sources than it does now.

“In the real world, the current transition strategy is visibly failing on most fronts,” said Nasser. Renewables can’t scale fast enough, their upfront costs are too high, and they are not as convenient.



For all of China’s advances in erecting solar panels, for example, it still burned a record 5 billion tons of coal last year, 10 times U.S. coal consumption. Electric vehicles now make up 19% of global car sales, yet global petroleum consumption continues to inch past 100 million barrels per day. According to Claudio Galimberti, analyst at consultancy Rystad Energy, “oil demand remains sticky” and will continue to rise “as low-carbon alternatives are not yet sufficiently developed or economically competitive to offset the growing demand for transportation and industrial services.”

So it might surprise you to learn that Aramco, ironically, is already one of the world’s biggest investors in the low-carbon transition. Nasser has dedicated 10% of its $50 billion a year in capital spending to renewables and launched the Aramco New Energies division. This year they completed the Sudair solar project, with 1.5 gigawatts of capacity, while the 2.7 gw Shuaibah solar field will be completed next year. By 2030, Aramco promises 12 gw of solar and wind. The company is in talks with Spanish oil giant Repsol for a stake in its renewables business, building on an existing Repsol JV to make zero-carbon jet fuel using “green” hydrogen and captured carbon dioxide. At Aramco’s Jubail refining complex they are building a system to grab 9 million tons a year of CO2. That will complement an existing process that captures carbon emissions from an ethylene glycol plant and turns it into low-carbon methanol.

Yet if Aramco is going to deliver on Nasser’s promise to capture and sequester 44 million tons per year of CO2 by 2035, it will need some new tricks. To hunt them down, Aramco has more than doubled funding to venture capital arm Aramco Ventures, with $4 billion available for investments.

Among the most promising is a new investment of tens of millions of dollars that Aramco Ventures has made into a New Mexico-based startup called Spiritus. Born out of Los Alamos National Lab, Spiritus cofounders Charles Cadieu and Matt Lee have developed a novel technology that they claim absorbs CO2 from the air. And unlike competing CO2 capture technologies, which rely on giant fans and compressors to suck in air, Spiritus’ devices work passively, as quiet as a tree. At the center of Spiritus’ technology are balls about the size of a grapefruit, made of a sorbent material that selectively grabs and holds with molecules of carbon dioxide. Think of a sponge, but with a far more complex structure with orders of magnitude more nooks and crannies.

Cadieu is cagey on exactly what it’s made of and how it works, but he describes the sorbent as functionally akin to how our own lungs’ alveoli grab on to oxygen. “Mammalian lungs — is there anything better? It’s hard to beat hundreds of millions of years of evolution,” he says. The material, believed to consist primarily of carbon-based graphene, chemically binds with the CO2.

Spiritus (latin for breath) will manufacture the material at a plant near Kansas City, and already has a site in Wyoming where it plans to erect structures to hold these sorbent balls. Once saturated with CO2, the balls are collected and put through a process that releases the CO2, which will then be injected deep underground in a licensed and regulated Class 6 disposal well.

Cadieu insists that their costs will be well below $100 a ton and that the initial Wyoming site will sequester 2 million tons a year. This would be extremely lucrative given the $180 per ton in carbon capture and sequestration tax credits available under the Inflation Reduction Act. Executives at Aramco Ventures say that once Spiritus has proven out the tech, they intend to deploy it in the Kingdom.

Saudi Aramco generated $117 billion in net income over the past 12 months on $490 billion in revenue — higher than any other outfit on the Forbes Global 2000. This year they plan to distribute $124 billion in dividends, which equates to about a 6% yield.

Aramco stock trades just barely above its 2019 IPO price, at a market cap of $1.9 trillion. The Saudi government still owns more than 90% of the company, and this month raised $12 billion in a secondary stock offering of less than 1% of shares. With nearly $100 billion in cash against $77 billion in borrowings, Aramco’s fortress balance sheet gives Nasser near infinite options to pursue growth. Much of that will come inside the Kingdom. Oil projects Marjan and Berri will each add more than 250,000 barrels per day of production capacity, while the newly announced Jafurah gas field will flow 2 billion cubic feet per day by 2030, while the $8 billion Fadhili Gas Plant expansion will add another 1.5 bcfd.

But Aramco, after decades as an insular operator, is keen to diversify globally. It’s investing $6 billion in a petrochemical plant in China, bought 40% of Gas & Oil Pakistan, acquired Chilean gas station chain Esmax for $370 million, and picked up a stake in Australian LNG developer MidOcean Energy.

The rumors are that Nasser is hungry for more deals, especially ones that could help meet Aramco’s promise of net-zero carbon emissions by 2050. A reasonable target could be BP (market cap $100 billion), which has been too busy reshuffling its top executive ranks to join in the ongoing flurry of Big Oil M&A. BP slipped 19 spots on this year’s Global 2000 to #47.

BP of course has far flung global oil and gas assets, but what may actually interest Nasser more is its recently consolidated renewables arm LightsourceBP, which boasts 60 gigawatts of wind and solar projects in the pipeline. That would go a long way toward the gradual greening of Saudi Aramco.

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