JEDDAH: Saudi Aramco’s investment strategy reflects a pragmatic and forward-looking approach as the global energy landscape continues to evolve, experts have told Arab News.

Having reported a net income of $106.2 billion in 2024, the world’s largest and most valuable energy company remains focused on its long-term growth. 

Central to this are its ambitious natural gas projects, including the Jafurah unconventional gas field and the Tanajib gas plant, which are vital to Saudi Arabia’s future energy security.

These initiatives support the Kingdom’s ongoing transition from crude oil to gas-powered electricity generation and align closely with Vision 2030’s objectives of economic diversification and environmental responsibility.

A pragmatic approach

Saudi Aramco is intensifying its natural gas development, recognizing its role as a cleaner alternative to crude oil. These efforts dovetail with the broader national strategy to reduce emissions while bolstering economic resilience.

Tamer Al-Sayed, chief financial officer at the Future Investment Initiative Institute, told Arab News that Aramco’s diversification extends to its global liquefied natural gas ventures, such as its stake in MidOcean Energy.

“Natural gas serves as a reliable bridge fuel with lower carbon intensity than crude,” he explained.

Aramco is also harnessing artificial intelligence to boost operational efficiency and reduce emissions, sharpening its competitive edge in an increasingly renewable-driven world.

“This twin strategy — scaling cleaner fuels and deploying smart technologies — ensures Aramco remains globally competitive while contributing to the Kingdom’s climate goals,” Al-Sayed said.

Investing in carbon capture 

A cornerstone of Aramco’s decarbonization is a large-scale carbon capture and storage facility under development in Jubail. Expected to capture up to 9 million tonnes of CO2 annually, it will be among the largest of its kind globally.

Al-Sayed acknowledged the issues associated with CCS, saying: “The economics remain challenging without a robust carbon pricing mechanism.”

He emphasized that CCS is a strategic bet to allow Saudi industry to maintain market access amid tightening low-carbon regulations. There is also potential for new revenue streams through “carbon capture-as-a-service.”

“In macroeconomic terms, this is a bet on future-proofing Saudi industry,” he added, highlighting the Kingdom’s readiness to capitalize on emerging carbon markets and green trade policies.

A cleaner future

Aramco’s renewable energy investments focus heavily on solar power and hydrogen. The company is advancing the Sudair Solar PV plant and three additional projects totaling 5.5 gigawatts, aimed at greening the grid and reducing domestic oil consumption — thereby freeing hydrocarbons for export or industrial use.

In the hydrogen sector, Aramco targets producing 2.5 million tonnes of blue ammonia annually by 2030, leveraging its gas reserves and CCS infrastructure to become a leading clean energy exporter.

“This aligns with Vision 2030’s goal of developing high-value, knowledge-based industries,” Al-Sayed said.

While renewables will not replace hydrocarbons overnight, they remain a critical element of Saudi Arabia’s long-term energy diversification.

Expanding downstream 

Aramco’s recent acquisitions in emerging markets underscore a strategic push into downstream operations. Its full ownership of Chile’s Esmax and a 40 percent stake in Pakistan’s Gas & Oil fuel retail network give the Saudi firm direct access to growing energy markets.

“From a Saudi economic lens, such downstream investments help reduce overreliance on crude oil exports by monetizing the full hydrocarbon value chain — from well to wheel,” Al-Sayed explained.

These moves also generate foreign revenue streams, support the Kingdom’s balance of payments, and complement broader trade diplomacy efforts.

With Pakistan’s fuel demand rising alongside its population and infrastructure growth, and Chile serving as a gateway into South America’s energy retail landscape, Aramco is positioning itself for durable growth beyond upstream activities.

“These investments also provide resilience against regional demand fluctuations, reinforcing Aramco’s strategy of maintaining a global presence in energy markets,” Al-Sayed added.

Recalibration for the future

In the face of rapid decarbonization, Aramco is recalibrating its long-term strategy through diversification, global investments, and adoption of future-focused technologies. The company aims to balance today’s operational realities with tomorrow’s energy goals.

“This is not just about resilience — it is about relevance,” Al-Sayed concluded, underscoring how strategic diversification and investments anchor Aramco firmly in the energy economy of the future.

Resilience amid cuts

Yaseen Ghulam, associate professor of economics and director of research at Al-Yamamah University in Riyadh, offered perspective on Aramco’s 2024 net income decline — which was 12 percent down from the $121.3 billion seen in 2023.

He attributed it to strategic oil production cuts agreed upon by OPEC+, including a 6.25 percent reduction from 2023 and a 14.28 percent cut from 2022.

“OPEC+ further plans to extend voluntary oil production curbs until September 2026, potentially causing a 0.4 million barrels per day reduction in 2025,” Ghulam said.

Despite these market constraints, he noted that Saudi Arabia’s non-oil sector has compensated for the oil-related revenue drop through higher household consumption and increased investment, driven by government diversification efforts.

He forecast non-hydrocarbon sector growth of at least 4 percent, supported by low unemployment, rising female workforce participation, and ongoing Vision 2030 progress, backed by strong fiscal buffers.

Sustainable investment 

When asked about Aramco’s capital expenditures — $53.3 billion in 2024 and projected up to $58 billion in 2025 — Ghulam emphasized the company’s pivotal role in shaping global oil supply trends.

“Aramco has made a record investment and is likely to continue in artificial intelligence, manufacturing, and corporate acquisitions to improve domestic and global oil supply chains and help diversify the nation’s economy,” he said.

He further highlighted the company’s commitment to developing lower-carbon products across energy, chemical, and materials sectors, alongside its plan to leverage its low-cost, low-carbon upstream production to meet growing global demand.

He also pointed out the company’s investments in renewables through its New Energies division, saying:, “Aramco has signed an agreement to build new green hydrogen and ammonia production facilities. The company wants to produce 11 million tonnes of blue ammonia a year by 2030, with the possibility of exporting to markets in Asia and Europe.”

Supporting diversification plans 

According to its 2024 annual report, Aramco’s technology initiatives aim to enhance upstream and downstream operations, expand its product portfolio, and promote sustainable growth aligned with its net-zero ambitions.

Ghulam observed that Saudi Arabia’s economy is rapidly reducing its reliance on oil revenues, thanks to infrastructure, tourism, and technology policies.

“Non-oil activities now make up 52 percent of overall economic activity, with an anticipated 65 percent by the end of the decade. Non-oil revenue in fact doubled in four years. Industries driving this growth include manufacturing, construction, communication, finance, retail trade, restaurants, hotels, and logistics and transportation,” he said.

The Kingdom is rolling out over 5,000 projects aimed at diversification, with 73 percent of new investment expected to target non-oil sectors.

Ghulam concluded that Aramco plays a critical role in supporting this transition by investing heavily in LNG, hydrogen, solar, wind, and battery materials like lithium, alongside maintaining upstream oil projects to sustain its global leadership.

LONDON: Oil prices were little changed on Friday, heading for a modest weekly gain as easing US-China trade tensions were somewhat offset by higher supply expectations from Iran and OPEC+.

Brent crude futures were up 5 cents, or 0.1 percent, at $64.58 per barrel at 12:53 p.m. Saudi time, while US West Texas Intermediate crude futures rose 2 cents to $61.64.

Both contracts fell more than 2 percent in the previous session on the prospect of an Iranian nuclear deal, which could result in more barrels being released onto the global market.

“The oil market is struggling to rise further, as the feel-good effect of the US-China trade detente fades,” said Harry Tchiliguirian, group head of research at Onyx Capital Group.

“OPEC+ accelerates the unwinding of its voluntary supply cuts and the US-Iran nuclear talks are still ongoing, keeping the barrels of the latter still flowing to China.”

US President Donald Trump said the US was nearing a nuclear deal with Iran, with Tehran “sort of” agreeing to its terms. However, a source familiar with the talks said there were still issues to resolve.

ING analysts wrote in a note that a nuclear deal lifting sanctions would allow Iran to increase oil output, resulting in additional supply of around 400,000 barrels per day.

Despite the potential supply pressure, both Brent and WTI are up so far this week, gaining around 1 percent.

Sentiment got a boost after the US and China, the world’s two biggest oil consumers and economies, agreed to a 90-day pause on their trade war during which both sides would sharply lower trade duties.

The hefty reciprocal Sino-US tariffs had raised fears of a sharp blow to global growth and oil demand.

Analysts at BMI, a unit of Fitch Solutions, said in a research report however that “while the 90-day cooling off period leaves the door open for additional progress on lowering trade barriers on both sides, the uncertainty on longer-term trade policy will limit price upside.”

Adding to market concerns was an expected surplus.

The International Energy Agency on Thursday hiked its 2025 global supply growth forecast by 380,000 bpd and projected a surplus for next year, despite a minor upward revision of its 2025 global oil demand forecast by 20,000 bpd.

Investors were also watching for signs of interest rate cuts by the US Federal Reserve, which could bolster the economy and oil demand.