On the edge of the Arabian Gulf, the immense scale of Saudi Aramco, the world’s largest oil producer, is prominently displayed. One building features a 140-foot-long curved monitor encircling a room, monitoring the flow of crude through 25,000 miles of pipelines.
Nearby, at the company’s “advanced exploration and petroleum engineering research center” (EXPECArc), scientists fine-tune seismic drones that can analyze underground rock formations and instantly relay the data to engineers. This technology saves Aramco the cost and risk of sending teams into the desert to drill for oil. Additionally, researchers test fast-curing cement infused with carbon and experiment with compounds designed to capture carbon directly from the air, aiming to develop technology that could mitigate the environmental impact of burning oil.
During a rare two-day visit by Fortune in early May, Aramco showcased dozens of research projects at its Dhahran headquarters in eastern Saudi Arabia. Around 20 engineers, specialists, and executives detailed their innovative inventions, some of which the company believes could become highly profitable exports with a significant influence on the oil and gas industry.
Aramco’s intention in revealing its research to a select group of journalists was clear. As environmentalists pressure oil giants to reduce fossil fuel production, Aramco aimed to present itself as a climate ally, deeply concerned about global warming while committed to producing oil for generations. Projecting an environmentally friendly image is increasingly seen by oil producers as crucial for addressing shareholder activism and satisfying regulators.
However, Aramco executives emphasize that their climate initiatives are self-motivated. “This is our environment. This is our country,” said Ashraf Al-Ghazzawi, executive vice president for strategy and corporate development, in a lengthy interview. “This was not dictated to us.”
‘We don’t see any contradiction’
The message was straightforward: Aramco asserts it can address climate change while producing around 9 million barrels of oil daily. (In comparison, ExxonMobil, the second-largest oil company, produces less than one-third of that amount.) “We don’t see any contradiction,” says Ashraf Al-Ghazzawi. “Combating emissions from these conventional energy sources is a very viable option.”
For the Saudi royals, conventional energy remains vital. Revenue from the country’s vast oil reserves accounts for 50% of the Saudi economy. Profits from oil—which costs Aramco less than $4 a barrel to produce—are essential for funding the government’s other economic development projects. In May, the company reported nearly $23 billion in free cash flow for the first quarter of this year, and last year it generated $440.8 billion in revenue.
Aramco’s objective is to sustain its oil business well into the future, despite the global shift towards greener energy. The company claims its technological advancements will reduce carbon emissions from each barrel of oil produced by 15% by 2035, equating to 51.1 million tons of carbon annually. Aramco aims to achieve net-zero emissions by 2050, excluding joint ventures and Scope 3 (end-user) emissions. Even in 2050, Aramco predicts that millions will still drive fuel-powered cars, fly on jet-fuel planes, and ship cargo on marine-fuel vessels.
“We need all sources of energy to meet the growth in demand, which is tremendous in the developing world,” says Ahmad Al-Khowaiter, executive vice president for technology and innovation. “The main pillar of our strategy and technology is efficiency and optimization of our existing production.”
This focus on efficiency, rather than reducing production, is evident throughout the Dhahran headquarters, or “camp,” as staff call their American-style suburban complex, complete with Starbucks, Tex-Mex food, and Little League baseball.
However, to many climate scientists and environmentalists, reconciling being an oil giant with being a climate champion seems impossible. The London-based financial NGO Carbon Tracker Initiative, which monitors companies’ environmental performance, ranked Aramco’s climate goals the weakest among 25 publicly traded oil and gas companies last September, noting that Aramco’s targets apply only to wholly owned and operated facilities. Generally, the NGO argues, the industry “continues to put investors at risk by failing to plan for production cuts.”
The carbon-capture debate
Aramco is determined to outlast the global energy transition. Ahmad Al-Khowaiter, head of technology and innovation, says the company has tripled its research and development staff since 2010, and in 2023, it registered 1,033 patents with the U.S. patent office. To support these efforts, Aramco recruits staff directly from Saudi high schools and sponsors their specialized education, often in the U.S. For example, one engineer Fortune met is about to start her doctoral studies at Stanford, while another is preparing to leave for Cornell this summer.
Aramco currently spends around $800 million annually on R&D, with 60% of that focused on sustainability, according to Khowaiter. “Ultimately, the market will value low-carbon products.” This investment is evident in the bustling activity at headquarters, especially in carbon capture and reuse efforts.
Carbon capture is a technology widely embraced by oil producers, though many climate scientists and officials remain skeptical, accusing the industry of using it to delay meaningful emission reductions. U.N. Secretary-General António Guterres has criticized plans that prioritize carbon capture over clean energy as “proposals to become more efficient planet wreckers.”
Aramco executives reject this criticism. At the company’s Hawiyah gas plant, two hours south of Dhahran, carbon emitted during oil and gas production is captured and transported 50 miles away to be injected into an oil well. This process boosts crude recovery and stores the carbon, serving as a modest pilot project to reuse carbon rather than emit it into the atmosphere. Khowaiter says Aramco aims to halve the cost of carbon capture, making it commercially viable. Starting in 2028, the company plans to capture and store about 9 million tons of carbon annually in Jubail, north of its headquarters.
Pricey hydrogen
However, much of Aramco’s advanced technology remains too costly to bring to market. This includes developing hydrogen as a fuel source, a focus of research at EXPECArc for years. In 2020, Aramco made the world’s first shipment of blue ammonia—a liquified hydrogen derived from hydrocarbons—to Japan. But blue ammonia is still difficult to transport and significantly more expensive than oil or gas.
Aramco predicts that blue and green hydrogen (produced from renewables) will become a $700 million industry by 2050, which is relatively minor for a company of Aramco’s size. The company is exploring ways to utilize blue hydrogen locally. One proposal involves using blue hydrogen to power a factory it operates with Saudi Arabia’s Baosteel. The goal is to use cleaner energy to produce steel plates, which can then be sold at a premium as low-carbon products compared to traditional, higher-polluting steel.
Determining which R&D projects will ultimately succeed could take years—time that many worry the world cannot afford. “For me, a big litmus test is how rapidly they are actually going to be able to decarbonize their oil and gas,” says James Ingram, senior editor for the Middle East Economic Survey, “or whether it is just talk.”
Aramco’s strategy chief, Ashraf Al-Ghazzawi, dismisses the idea that the company should reduce fossil fuel production. “We were never an either-or company,” he says. “Aramco provides a great example where emissions can be dealt with, it can be managed.”
