Aramco, Samsung sign MoU, will leverage 5G tech

Aramco has signed an MoU with Samsung Electronics, paving the way for preliminary plans for a strategic collaboration that would localise an industrial 5G technology ecosystem, starting with private networks.

The non-binding MoU aims to contribute to the digital transformation of various industrial sectors in Saudi Arabia including energy, petrochemical and manufacturing.

It will leverage advanced 4G and 5G technologies that are capable of providing secure, fast and reliable communications.

Aramco and Samsung’s partnership seeks to help realise advanced industrial 5G use cases with mission-critical communications.

The proposed collaboration follows the launch of Aramco Digital Company at the 7th edition of the In-Kingdom Total Value Add (iktva) Forum and Exhibition in January.

Aramco Digital seeks to accelerate digital transformation within Saudi Arabia and the entire MENA region.

Meanwhile, the oil major signed over 100 agreements and MoUs worth $7.2bn to promote a diverse, sustainable and globally competitive industrial ecosystem in Saudi Arabia.

The state-owned energy giant signed a strategic partnership with Zoom and a collaboration pact to implement supplier financing solutions with Taulia.

Aramco’s partnership with Zoom aims to build the communications technology firm’s first global data centre in Saudi Arabia and the data centre will connect to the company’s global data centre to serve the kingdom and the region.

The company also signed a deal with US logistics company DHL to explore the possibility of forming a joint venture to offer procurement and supply chain services to Saudi Arabia.

Accenture signed a deal to build system integration and digital solution services for Saudi Aramco.

Aramco investment strategy aimed at diversification

In other news, Aramco is among the biggest listed companies in the kingdom that are spearheading several investments as part of the government’s broader strategy to expand their portfolios to generate revenue to finance its economic diversification agenda.

Aramco signed a $6bn framework deal with Korea Eximbank, also known as the Export-Import Bank of Korea, to help South Korean companies win lucrative contracts in the kingdom’s giga-projects.

Read: Saudi Aramco signs $6bn deal with Korea Eximbank

The three-year deal is a follow-up measure to support a “second Middle East boom,” referring to potential business opportunities.

Under the agreement, Korea Eximbank can lend as much as $6bn to Aramco, which in turn pays South Korean companies involved in projects whose orders were placed by the state-owned oil major.

يعكس التقرير السنوي لعام 2022م استمرار تركيزنا على الاستثمار في النمو والابتكار والإسهام في مستقبلٍ أكثر استدامة

تعرّف على المزيد ?https://t.co/WxYcBvfXHc#أرامكو pic.twitter.com/g4050ot4DA

— أرامكو (@saudi_aramco) March 13, 2023

With a market capitalisation of SAR7.07tn as of March 23, 2023, Aramco is the second most valuable company after iPhone maker Apple. The state-energy firm reported a record net income of $161.1bn for 2022, a 46.5 per cent increase from $110bn a year earlier, driven by higher oil prices, increased volumes sold and improved margins for refined products.

The company said its capital expenditure surged 18 per cent year-on-year to $37.6bn in 2022 as progress continues on multiple fronts to deliver reliable, affordable and more sustainable energy.

It reaffirmed it would continue to invest to increase its maximum production capacity to 13 million barrels a day by 2027.

The oil behemoth said its free cash flow soared to $148.5bn, compared to $107.5bn in the same period in 2021. Aramco declared a dividend of $19.5bn for the final quarter of 2022, a 4 per cent increase compared to the previous three-month period. The dividend will be paid in the first quarter of 2023.

Read: Saudi Aramco profit surges to $161.1bn in 2022, raises dividend

The company also partnered with French automaker Renault and China’s Geely Automobile Holdings to create a powertrain venture.

The joint venture will have an annual production capacity of more than five million internal combustion, hybrid and plug-in hybrid engines and transmissions per year.

Saudi Arabia is undergoing a profound transformation and the economy is getting a boost from this social transformation and the government’s renewed efforts to diversify its economy away from heavy reliance on oil and gas.