Saudi oil giants lead on march to net zero

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Aramco and Sabic commit to big investments in technology to combat emissions from hydrocarbons

Oil industry heavyweights from Saudi Arabia have pledged to pursue a green energy transition against a backdrop of robust energy prices, with Brent currently hovering at around $110 a barrel of oil.

Officials from Saudi Aramco and Saudi Basic Industries Corporation, better known as Sabic, say they are “proud” to be among the first companies to experiment with carbon sequestration.

“I believe that Saudi Aramco is in a strong position to lead on the energy transition,” said Ashraf Al-Ghazzawi, vice president, strategy and market analysis at Saudi Aramco.

“There’s a significant amount of money being invested into technology by companies like Aramco and Sabic to combat the emissions from hydrocarbons.”

Aramco’s biggest green move yet

In October, Aramco, the world’s largest oil-exporting company, announced plans to become carbon neutral by 2050 and has since been unveiling numerous initiatives and projects.

In its biggest green move to date, Aramco announced in August 2021 that it was backing one of the largest solar projects planned in the Middle East. Aramco took a 30 percent stake in the $900 million, 1.5GW Sudair Solar project that forms a key part of an initiative led by Saudi sovereign wealth fund, the Public Investment Fund (PIF), that aims to deliver the majority of the renewable energy needed to meet the kingdom’s target of achieving net-zero carbon emissions by 2060.

Speaking alongside Al-Ghazzawi at an Environmental, Social and Governance-themed conference held in London on Friday was Bob Maughon, chief technology and sustainability officer at Saudi chemical manufacturing company Sabic, 70 percent of whose shares are owned by Aramco.

Maughon highlighted how his company is working hard to achieve decarbonisation through investments in diversifying its energy supply and infrastructure.

“If you look at our 2030 goals, they revolve around real projects and we’re moving fast in the kingdom to achieve greater sustainability,” said Maughon.

“We’re committed to converting our energy supply by leveraging blue and green hydrogen and we’re committed to investing in carbon capture. We’re also looking to convert our furnaces to both hydrogen and electricity.”

Sabic’s carbon neutrality goals

Sabic unveiled its global strategy towards achieving carbon neutrality at the inaugural Saudi Green Initiative (SGI) Forum, held in October. As a founding member of the Low Carbon Emitting Technologies (LCET) initiative with the World Economic Forum, Sabic has collaborated with 10 peer companies to share early-stage risks and co-invest in developing and upscaling LCETs.

It is also partnering in the development of the world’s first large-scale chemical site to operate on 100 percent renewable power, while in a separate project, it is developing solutions for electrically heated steam cracker furnaces which could reduce emissions by up to 90 percent.

In October, Sabic announced it is investing $1.37 billion at its Teesside facility in northeast England in order to “reduce its carbon footprint by up to 60 percent in phase one, making it one of the world’s lowest carbon-emitting crackers”. 

In the second phase, a carbon neutrality feasibility study will be undertaken via the use of hydrogen as a fuel source.

Sabic is aiming to reduce its greenhouse gas emissions worldwide by 20 percent by 2030 compared to 2018 and aims to become carbon neutral by 2050.

“Just like Sabic and many other international companies, we have carefully crafted plans with specific projects and investments to help us achieve decarbonisation,” added Al-Ghazzawi, before referencing Aramco’s recent record first-quarter net profit of $39.5 billion, an 82 percent annual increase.

Oil and gas will continue to play a role in the future of the decarbonised world

Ashraf Al-Ghazzawi, vice president, strategy and market analysis at Saudi Aramco

The future of oil and gas

“The fact that we are in a strong financial position serves to bolster these plans. Having said this, nearly every energy outlook modelling will tell you that oil and gas will continue to play a role in the future of the decarbonised world and indeed be a competitive enabler of future decarbonising economies.”

Al-Ghazzawi’s comment was echoed by Aramco’s CEO Amin Nasser, who said at the World Economic Forum in Davos that the energy shock sparked by the war in Ukraine has shown the need to maintain investment in oil and gas production.

Nasser noted how under-investment in hydrocarbon projects had left the industry unable to guarantee affordable energy supplies because little had been done to curb demand.