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How BP and Aramco Ventures invest in technology

Wednesday, February 20, 2019

Technology investors from BP and Saudi Aramco Energy Ventures explained their approach to investing in technology, in a panel discussion at the Aberdeen ENGenious forum in September.

Technology investors from BP and Saudi Aramco Energy Ventures explained their approach to investing in technology, in a panel discussion at the Aberdeen ENGenious forum in September

Stephen Cook, chief commercial officer, Group Technology at BP, said that his job could be described as fixing BP's pain points, picking up on a comment by a previous speaker that the best best approach to developing technology can be to identify things which don't work or 'suck' and try to fix them.

Getting into 'ventures', for BP, was a strategy to 'manage uncertainty - having a portfolio of options not tied to your current group think, rather than looking for a new unicorn,' he said.

Mr Cook has a Phd in bio-organic chemistry, and has been with BP for 20 years, now working in its 'central technology' organisation, in a role defined as 'business development', looking for ways to combine new technology and business models, together with 'strategic insights'. He looks after alliances BP forms with other organisations, and new company spin-outs, or new 'commercial structures'.

His team works closely with BP's 'corporate ventures team', which are looking for more 'disruptive technology' likely to have an impact over the longer term.

Technology he is particularly excited by includes fibre optics in the well for acoustic recording to understand what is happening, and improved seismic technology to see subsalt and sub basalt.

One company it invested in is XACT Downhole Telemetry Inc of Houston and Calgary. Another is a NASA spin-out AI company called Beyond Limits, he said.

The relationship between small start-ups and a big oil company is fraught with challenges, he said. To start-up company, BP appears like a telephone box on a street looks to a bystander, a mass of wires and who knows where they all go. Perhaps the solution is for BP to better mould its 'interface' around what these needs are.

BP does not see owning IP as the only way or necessarily the best way to achieve competitive advantage with new technology. It could also be achieved through the relationships the company has, or the speed at which it can do things. 'As we look at some digital opportunities, IP becomes less and less important,' he said.

Saudi Aramco Energy Ventures

Hans Middlethon, managing director of Saudi Aramco Energy Ventures Europe (SAEV) venture capital, said that it is getting hard predicting where the next technology will come from.

In former years, new oil and gas technology generally came from Scotland or the West Coast of Norway. but now it is developed in many more places, such as Berlin, Helsinki, Capetown and California, he said.

SAEV is headquartered in Dhahran, with offices in Aberdeen, Oslo, Houston, Tokyo, Seoul, Beijing and Singapore. It has invested in 30 companies so far, mainly in the US and Europe, typically investing $5m to $10m. Mr Middelthon is a former director of private equity company 3i.

The company sees its role as helping 'young digitech companies' to break in, and in particular giving companies the sort of long term support they need to break into the oil and gas industry. You need a long time to understand the ins and outs of the industry, he said. And many other investors lost interest in the industry after the oil price crash or the financial crisis.

The biggest hurdle is separating the 'quick wins' and the 'not quick wins' - and quick wins means a technology which Aramco is ready for. 'Trying to force technology into a system that is not ready, is not going to work.'

By contrast, managing intellectual property does is not the biggest hurdle, and generally something you can sort out, he said.

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