The world’s largest oil company, Saudi Aramco, is apparently mulling over as much as $5 billion in renewable energy investments as part of plans to diversify from crude oil production, according to people with knowledge on the matter.
According to various reports, Saudi Arabia’s national petroleum and natural gas company, Saudi Aramco, is apparently considering as much as $5 billion worth of investments into renewable energy firms as part of larger plans to diversify their operations. According to one report from Bloomberg, “banks including HSBC Holdings Plc, JPMorgan Chase & Co. and Credit Suisse Group AG have been invited to pitch for a role helping Aramco identify potential acquisition targets and advising on deals.”
This should come as no surprise to anyone who has been watching the global energy market fluctuate over the last decade. The Gulf countries currently have as close to a monopoly as possible over the world’s oil resources, and dictate oil prices at their whim. But if natural gas reserves and renewable energy continue to put a dent in the need for their oil, then their businesses are going to stumble.
Subsequently, we have seen over the last few years big oil majors from the Middle East begin to diversify their portfolios, looking to renewable energy investments as a surefire way to keep themselves afloat in the long run.
Back in November of 2016, reports circulated regarding seven leading oil and gas majors looking to join forces to create a renewable energy investment fund for the development and promotion of renewable energy. The news was confirmed not long after with the creation of the Oil and Gas Climate Initiative (OGCI) which announced a $1 billion investment over the next ten years into renewable energy development.
“Today’s announcement highlights our strong and collective commitment in addressing climate change, allowing us to combine our expertise and resources in tackling one of the greatest challenges facing our industry and the world,” said Saudi Aramco President and CEO Amin Nasser at the time. “Technology-enabled solutions are key to managing climate change, and this announcement by OGCI to collectively fund $1bn is paramount to our long-term commitment in meeting rising energy demand.”
The companies involved in the Initiative include: BP, CNPC, Eni, Pemex, Reliance Industries, Repsol, Royal Dutch Shell, Statoil, and Total.
Saudi Arabia as a whole is aiming to produce 10 gigawatts of power from renewable energy sources by 2023, and is also looking to transform Saudi Aramco into a diversified energy company. It would seem that Saudi Arabia and Saudi Aramco are actually staying true to their words, though the proof will be in the oily pudding, so to speak.