Non-oil activities increasingly important for Aramco

Updated 07 July 2017
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Non-oil activities increasingly important for Aramco

DUBAI: Saudi Aramco’s annual review, published on Thursday, highlights activities outside the traditional energy business — technology, innovation and human capital — which it sees as central to its corporate structure and which it believes will help maximize its value for the upcoming initial public offering (IPO).
“Technology and innovation are key drivers of our strategy to maximize the inherent value of the resource base, enable a more diversified and globally competitive domestic market for our products, and create a Saudi workforce with a world-class knowledge base,” the review said.
“We realize these goals by developing and commercializing new technologies, evolving strategic alliances with industry partners, forging relationships with world-leading research and academic institutions, and pursuing strategic acquisitions and investments to generate additional value,” it added.
In research and development, Aramco’s efforts focus on the upstream, downstream, and sustainability domains — specifically on high-impact technologies that have the potential to create significant competitive advantage for operations, and help grow new businesses.
In 2016, Aramco “progressed initiatives across the hydrocarbon value chain, from underwater robotic seismic acquisition and faster reservoir modeling, to improved refinery yields and new fuel formulations,” the review said.
Research network
Research is an increasingly important part of Aramco’s corporate strategy. Its Global Research Network has 11 offices in the Kingdom and around the world. Three in the US — in Detroit, Boston and Houston — came together to collaborate on climate change issues in 2016.
The venture capital subsidiary, Saudi Aramco Energy Ventures (SAEV), headquartered in Dhahran and with a presence in North America, Europe, and Asia, invests globally in startup and high-growth companies developing technologies of strategic importance.
In 2016, SAEV made eight new direct investments and began a series of technology pilot projects, the review said.
Human resources and localization of jobs and services also play a prominent part in the review.
“The Kingdom is a land rich in natural resources — especially oil and gas. But its real wealth lies in the talents of its people and the potential of its younger generations. We help unleash this potential by delivering community-based corporate citizenship initiatives that give people the tools they need to seize the opportunities of the future,” it said.
Aramco runs 141 company schools in the Kingdom, and launched a program to encourage women’s employment in science, technology, education and mathematics.
In 2016, the flagship King Abdulaziz Center for World Culture, an initiative for enabling the knowledge economy through creativity and culture, opened in Dhahran. It organizes activities in Saudi Arabia and abroad on the themes of history, archaeology, arts and film of the Kingdom.


Global exchange funds eye Saudi Arabian equities

Updated 20 March 2019
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Global exchange funds eye Saudi Arabian equities

  • It comes as the country joins the FTSE Russell emerging markets index
  • Index provider MSCI is also adding Saudi stocks to its own emerging markets index

LONDON: Global exchange-traded funds are building cash piles to place in Saudi Arabian equities, according to a ranking compiled by Bloomberg.
It comes as the country joins the FTSE Russell emerging markets index, which is expected to attract billions of dollars in foreign fund inflows.
“We believe Saudi’s inclusion in the FTSE Russell EM Index will have a significantly positive impact on stock markets, Salah Shamma, the regional head of investment at Franklin Templeton Emerging Markets Equity, told Arab News.
“With an estimated $115 billion benchmarked against the FTSE Russell EM Index, the Kingdom could constitute approximately 2.5 percent of the gauge, resulting in passive fund flows of about $3 billion,” he said.
A London-based exchange- traded fund (ETF) and another fund that trades in New York have together attracted around $327 million in new money since the beginning of January, Bloomberg reported on Tuesday.
The net flow as a percentage of assets for Saudi Arabia funds increased by about 48 percent this year.
FTSE Russell started to include Saudi stocks this week — the first of a five-stage process that will be fully implemented by March 2020.
Index provider MSCI is also adding Saudi stocks to its own emerging markets index.
Positions on the Saudi market through funds based abroad have delivered a return of about
12 percent each since the start of the year, compared with a gain of 10 percent for the Tadawul All Share Index, according to Bloomberg data.
Franklin Templeton’s Shamma believes the inclusion of Saudi equities in the two gauges will help to bring the wider region into the mainstream of emerging market investment.
“The fundamentals of the Saudi economy are strong, and we remain encouraged by the country’s progress in reducing its reliance on hydrocarbon revenues as well as the ambitious reform agenda that is underway there,” he said.
Listed companies in the Kingdom could see holdings by foreign investors rise to 10 percent when their shares are included in index providers MSCI and FTSE’s emerging-market indices, the chief executive of Tadawul told Reuters on Monday.
Saudi Arabia this week joined the FTSE Emerging All Cap Index with a weighting of 2.9 percent.
Khalid Al-Hussan told Reuters that he expected equities on Tadawul to attract $5 billion of passive fund inflows after the FTSE Russell inclusion. Foreign investors currently hold about 5.9 percent of Saudi shares.