Under the LoI, Aramco will become a potential minority stakeholder in a new powertrain technology company (PWT), to be established by Geely Holding Group (Geely Holding), Geely Automobile Holdings Limited (Geely Auto HK.0175) and Renault Group. The new company will be dedicated to internal combustion and hybrid powertrain technologies.

Aramco’s investment would support the growth of the company, and contribute to key research and development across synthetic fuels solutions and next-generation hydrogen technologies. It is expected that Geely and Renault Group retain equal equity stakes in the new independent entity.

With a global network of 17 powertrain plants and five R&D centers across three continents, the planned company is intended to be a standalone global supplier with a combined capacity of over 5m internal combustion, hybrid and plug-in hybrid engines and transmissions per year, supplying over 130 countries and regions.

Mohammed Y. Al Qahtani, Aramco Executive Vice President of Downstream, said: “This Letter of Intent represents a new milestone in our ongoing commitment to transportation technologies and presents a platform to support Aramco’s research and development in engine innovation. Our planned collaboration with Geely and Renault would support the development of powertrains across the automotive industry, and aligns with our broader efforts across our global operations.”

Luca de Meo, CEO of Renault Group, said the partnership with Aramco will raise its joint powertrain company together with Geely Group to the next level and give it a head start in the race towards ultra-low-emissions ICE powertrain technology. He said, “Aramco’s entry brings to the table unique know-how that will help develop breakthrough innovations in the fields of synthetic fuels and hydrogen.”

Daniel Li, CEO of Geely Holding Group, said, “The proposed investment by Aramco represents recognition from global industry leaders in the PWT’s future business prospects and vision for pioneering low and carbon-free fuels such as methanol and hydrogen.”

Aramco’s strategy exemplifies the challenges facing major corporations in the energy transition.

On the one hand, it expects to make “significant investments” in upstream operations over the next decade, which will reinforce its preeminent position in oil, and allow it carry out exploration and production programs to develop conventional and unconventional gas resources.

But on the other, it sees “product diversification and global integration” as a means to strengthening its portfolio resilience, and delivering additional revenue streams. Developing new technologies such as hydrogen and carbon capture storage and utilisation (CCUS) will be a key part of the jigsaw as it strives to build a circular carbon economy. It has the capability to capture and process 45m scf of CO2 at its Hawiyah plant daily.