How Aramco’s IP push has prepared it for a future defined by innovation
In 2020, Saudi Aramco was granted 683 US patents, while it filed a further 1,183 applications, more than any other international oil company.
It is the latest in a year-on-year growth pattern that has pushed the company to the top of the innovation ladder. And it is one reason why the consultancy BCG named Aramco the most innovative company in the Middle East and Africa in its 2020 Most Innovative Companies report.
Aramco’s patent portfolio has increased by more than 2,000 US patents in the past six years. A focus on securing intellectual property rights has gone hand-in-hand with an innovation revolution at the company.
But as any innovative company knows, patent volumes only tell part of the story. Along with a focus on capturing intellectual property rights has been a 20-year campaign to boost innovation at Aramco.
It is a campaign that has transformed the company’s culture, acted as a catalyst for new ventures and partnerships, and taken us in new directions. It is also bucking industry research and development trends.
According to the International Energy Agency, overall spending on research and development by oil, gas and other fossil fuel extraction sectors in 2018 was 45 percent lower than 2014. This trend is likely to have been exacerbated by the impact of the pandemic on global energy markets.
Aramco’s patent portfolio is due to grow even further over the next two years, characterized by a broad scope of applications that reflect the growing diversification of its business.
However, sacrificing research and development in the name of cost savings is a mistake. In fact, innovation has never been more important to this industry, especially as it is through innovation that we are able to meet the world’s demand for reliable and affordable energy while also building a cleaner and more sustainable future for coming generations. It is no coincidence that Aramco dedicates up to one-third of its research funds to sustainability technologies.
A commitment to innovation
It was back in 2001 that Aramco took steps to become more innovative. The company created an IP management group and launched an innovation management system that included an Innovation Board and a crowdsourcing approach to generate ideas from people across the company to solve work challenges. Key performance indicators were set for each department to monitor staff engagement and implementation approval rate. Monetary incentives were introduced for employees whose patents were granted, with another monetary award if the idea was commercialized.
In addition, the company has adopted a Corporate Innovation Policy, included a requirement for the filing of patents within some development programs, and is currently establishing an Advanced Innovation Center.
Aramco received its 100th US patent in 2010. By 2012, we had developed a team of specialist patent attorneys to handle application filing, and the results were clear — the number of patent applications filed and patents granted has risen each year, increasing five-fold between 2015 and 2020.
Many of the patents are for innovations Aramco uses itself for competitive advantage, although they can also be licensed to others, creating extra value for the company.
Innovation takes off
From 2011, we expanded our research operations, opening a network of labs around the world, close to global talent hubs. For example, Aramco’s Detroit research lab builds on the automotive technology for which the area is famous, looking at mobile carbon capture for vehicles and gasoline compression ignition technology. The global research centers have also contributed to Aramco’s increasing patent portfolio, across a broad spread of areas.
In addition to advances developed in-house, patents have also been co-developed with academic organizations and other external entities for strategic purposes. And Aramco’s patent portfolio is due to grow even further over the next two years, characterized by a broad scope of applications that reflect the growing diversification of its business. New intellectual property in the pipeline relates to everything from geology and geophysics to advances in transport and the non-metallic sector.
Digital transformation is driving intellectual property investment in areas such as artificial intelligence, the Fourth Industrial Revolution, robotics and automation. And there is enthusiasm for new patents in the chemicals, nonmetallic and drilling fields, given high demand for such technologies and the associated benefits. They offer high potential for value creation, present possibilities for new jobs and could even pave the way for the establishment of new manufacturing facilities inside Saudi Arabia.
Investing in the future is crucial, even as the industry emerges from one of the most challenging environments it has experienced. This mantra has never been more essential for an industry that, despite oil demand falling in 2020, will remain central to the functioning of the global economy for decades to come. As the research consultancy for energy technologies, Thunder Said Energy, puts it: “Technology leadership will remain crucial to maximizing long-run value in the oil industry.”
• Jamil Bagawi is the chief engineer at Aramco.