Aramco Ventures believes generative AI will be part of helping the Saudi oil major meet its 2050 net zero target.

“We are looking at AI that can be applied  in the sustainability and energy transition domains,” says Mahdi Aladel, chief executive of Aramco Ventures, the $7.5bn corporate venture arm of Saudi Aramco. “A lot of it is hardware, but all hardware today has some software, algorithms and
AI components to it.”

Saudi Aramco has increased investments in energy transition technologies. The company, which is responsible for nearly 10% of the world’s oil supplies, has pledged to reach net zero on operational emissions by 2050. Accordingly, Aramco Ventures’ focus has shifted from investing in core oil and gas tech to IR4.0 (the fourth industrial revolution), digital, sustainability and AI technologies.

“AI capabilities are a major disruption force that can enhance the energy industry,” says Aladel. “Part of the challenge is deciphering what is differentiated from the rest because everyone is now slapping the words AI and generative AI on their solutions, products or startups.”

AI will increasingly be part of the mix, transforming areas such as smart grids, renewable energy forecasting, predictive maintenance and carbon capture.

Aramco now has 105 active portfolio companies including Dendra Systems, an AI-equipped data platform to restore biodiversity and measure carbon footprint.

Aladel is cautious about the hype around generative AI, which is inflating funding rounds. Some generative AI companies have billion-dollar valuations from an early stage and require larger ticket sizes from the start. Aladel is keen to cut through the noise and focus just on those that are a good fit for Aramco.

“AI capabilities are a major disruption force that can enhance the energy industry,” says Aladel. “Part of the challenge is deciphering what is differentiated from the rest because everyone is now slapping the words AI and generative AI on their solutions, products or startups.”

A key consideration is how AI companies can have strategic impact to Aramco’s businesses. “That impact could help us do things quicker, safer, cheaper or better,” says Aladel. “We should be able to convert that strategic value into dollar figures. We then get that vetted externally through a consulting group to validate the value captured.”

Aramco’s VC initiatives include the  $500m Wa’ed Ventures fund that targets Saudi startups; the $500m Digital/Industrial Fund, investing in areas strategic to the firm; the $1bn Prosperity7 Fund I and the $2bn Prosperity7 Fund II that invests beyond the energy sector with a financial goal; the $1.5bn Sustainability Fund; and the $2bn Late-Stage Fund.