Aramco plans to maintain 10% stake in Renault-Geely JV, eyes more partnerships

Image credit: FAYEZ NURELDINE/ Getty Images

State-controlled oil company Saudi Aramco does not plan to increase its 10 per cent stake in fuel-based engines joint venture Horse Powertrain while it continues to pursue more deals to expand its downstream presence, a senior executive told Reuters.

Aramco in June agreed to buy a 10 per cent stake in Horse Powertrain, valuing the venture with Renault and Geely at around $8.2bn (EUR7.40bn), as part of its growing interest in the automotive industry, including in the development of so called e-fuels.

“The 10 per cent stake hits all of the boxes that we have for our financial and strategic objectives for this company,” Yasser Mufti, Aramco’s executive vice president for products and customers, said in an interview in Milan, where he was to follow Formula 1 Grand Prix in Monza at the weekend.

“I saw a lot of speculation about that, but we were always targeting a 10 per cent stake,” he said in the first public comments by a senior Aramco executive on the company’s plans for the Horse Powertrain joint venture.

Geely and Renault will each own 45 per cent of the venture, which will supply gasoline engines, hybrid systems and gearboxes for internal combustion engine vehicles.

Aramco, the world’s top oil exporter, is expected to finalise the stake purchase later this year.

Horse Powertrain aims to become a global supplier for automakers, which can buy “off-the-shelf” engines compatible with advanced fuels, Mufti said. “By 2050, half the (global auto) fleet will still be conventional combustion engines or hybrids”.

Aramco’s M&A ambitions

Aramco will pursue more merger and acquisition deals after those it closed in the past 12 months, including the purchases of Chilean fuel retailer Esmax, stakes in Gas & Oil Pakistan, and U.S.-based MidOcean, its first LNG investment abroad.

“We’re very busy in this space,” Mufti said.

“The downstream business is where we have M&A opportunities and now LNG (liquefied natural gas) as well. We have targets and markets and we work with these opportunities as they come.”

Downstream refers to refining, and sales and marketing of oil and gas products.

Last year, Aramco spent around $9bn on acquisitions, up from $4.2bn in 2022, according to LSEG data, and is now discussing more deals, including acquiring stakes in China’s Shandong Yulong Petrochemical and Hengli Petrochemical.

Aramco – Aston Martin partnership

Aramco also announced on Tuesday that it was broadening its partnership with the Aston Martin Formula 1 team ahead of the 2026 implementation of new Formula 1 regulations, including requirements for sustainable fuels.

Mufti said Aramco was investing “hundreds of millions” to build two demonstration facilities with partners in Saudi Arabia and Spain to develop e-fuels that can be used in internal combustion engine vehicles and help reduce carbon footprint.

Made by synthesising captured CO2 emissions and hydrogen produced using renewable or CO2-free electricity, e-fuels are not cheap. Their estimated cost is EUR2 per litre if produced at scale, four times the typical wholesale price for petrol made from oil.

Mufti said the two facilities would be “excellent starting points” to help Aramco understand how to scale up e-fuel production and bring costs down. “I can be 100 per cent confident that the current cost structure will be improved dramatically.”

Read: Saudi Aramco allocates $100m to boost R&D at KAUST