From The Wall Street Journal

Saudi Arabia’s state oil company is working to turn itself into an innovation powerhouse while its much-delayed plans to go public remain on hold.

The U.S. Patent and Trademark Office granted Saudi Arabian Oil Co., better known as Aramco, 230 patents last year, four times as many as in 2013 when it racked up just 57. That placed Aramco third among oil-and-gas exploration and production companies that year, far behind Exxon Mobil Corp. but close to Chevron Corp.

Aramco’s most recent patents have included fluids to break rocky oil formations using micro-particles, a docking station for mobile robots deployed in oil fields and techniques to remove carbon from fuels.

Technologies “provide a competitive advantage…whether it’s for one shareholder or several shareholders,” said Aramco’s Chief Technology Officer Ahmad Al-Khowaiter in an interview at the company’s Dhahran headquarters.

Mr. Al-Khowaiter is trying to encourage a free flow of ideas at a time when Aramco faces more public scrutiny than ever as the company has put on hold a public offering of shares. Aramco is also weighing the possibility of attracting a single strategic investor.

In the past five years, Aramco has doubled the number of scientists in its labs, to 1,300 out of a total workforce of about 65,000, and opened nine research centers in places like Detroit, Paris and Beijing. It has scooped up top scientists from oil-services companiesSchlumberger Ltd. and Halliburton Co. and French car maker PSA Group.

“Technology has emerged as the single most important driver of competitiveness in the industry,” said Sam Blatteis, co-founder of the MENA Catalysts, a Dubai-based consulting firm.

Since its founding in 1933, Aramco has largely relied on its vast, cheap and easy-to-tap oil fields to generate abundant riches for the kingdom. Today, the company is pumping nearly as much as ever, but some of its prodigious fields are depleting. Meanwhile, the company is under pressure to cut emissions from the hydrocarbons it produces while communicating to its customers and prospective investors that oil’s relevance will endure.

To adapt, Aramco has begun seeking out innovative ways to coax more oil out of the ground and devise creative, new uses for its petroleum products. The state-run giant is also sharing ideas and teaming up with non-oil companies. It has held talks on developing technology hubs with U.S. technology companies Alphabet Inc., Google’s parent, and Amazon Web Services, part of Amazon.com Inc.

Driving Aramco’s culture shift is the 51-year-old Mr. Al-Khowaiter, who started at the company 35 years ago. After completing graduate studies at the Massachusetts Institute of Technology, he shifted to research, and was appointed five years ago as the company’s first chief technology officer.

Mr. Al-Khowaiter’s team is developing robots that inspect underwater pipelines, technologies aimed at easing the extraction of oil and gas trapped in rocky formations and new ways to use more of its crude to make chemicals. Earlier this month, Aramco clinched two new deals stepping up its research efforts. It paid $1.74 billion for the 50% it didn’t already own in the Dutch high-tech tire maker Arlanxeo and entered into a partnership with Mazda MotorCorp. to develop low-carbon fuels.

During a recent visit to Aramco’s sprawling headquarters in the middle of Saudi Arabia’s northeast desert region, the fast-talking Mr. Al-Khowaiter spoke enthusiastically about ideas his department is developing.

The company often asks its youngest researchers—many freshly graduated from Saudi universities—to solve business problems such as dust piling up on solar panels and hurting their energy production, said Ammar Al Nahwi, the manager of the company’s Research and Development Center. They invented a robot that dusts off the panels, he said.

Later that day, Mr. Al-Khowaiter’s team demonstrated a technology that resulted from another such challenge: a robot that looks like a cross between a beetle and a compact vacuum cleaner. The remote-controlled device inspects pipelines in the Red Sea’s heavy-current waters. It has yielded seven patents and led to cost reductions on pipeline inspection.

In another laboratory, scientists showed off an Aramco-logoed car prototype that featured a trunk where carbon dioxide could be stored, instead of being ejected from an exhaust pipe. The gas is later transferred to external storage tanks, where it can be used as a component to manufacture cement.

Mr. Khowaiter is pushing for even more creative thinking. Two years ago, he was part of an Aramco delegation that visited Alphabet’s headquarters in Mountain View, Calif., to understand how companies innovate. He said Aramco has held discussions with Google on how to use artificial intelligence to improve ways to search for oil.

Despite its efforts to innovate, Aramco is like a “supertanker,” said Paul Stevens, a fellow at London’s Royal Institute of International Affairs, who researches state-run oil companies. “It takes time to change direction.”


Legal Notice