Saudi Aramco Energy Storage, $1.5 B L&T CCS Deal, 1 Rondo Mo U, and 34 US Agreements (2025)

Industrial Decarbonization, Saudi Aramco Sidesteps BESS Market for Internal Gains

In 2025, Saudi Aramco executed a highly strategic and cautious entry into the energy storage sector, deliberately avoiding the competitive grid-scale Battery Energy Storage System (BESS) market and instead prioritizing technologies that decarbonize its own industrial operations. This approach allows the company to build capabilities in new energy verticals while improving the efficiency and environmental footprint of its core hydrocarbon business, effectively de-risking its participation in the energy transition.

A Calculated Sidestep of the BESS Market

Rather than competing with established players in the rapidly growing global BESS market, Aramco chose to observe from the sidelines. This move circumvents the intense competition and supply chain volatility characteristic of a sector valued between $13.2 billion and $50.81 billion in 2025.

• The global BESS market is dominated by vertically integrated players and subject to price fluctuations in key materials like lithium and cobalt, representing a high-risk entry point for a new participant.
• Aramco’s 2025 activities showed no direct investment in or deployment of grid-scale lithium-ion battery projects, indicating a strategic decision to avoid this segment for now.
• This contrasts with other national oil companies that have made direct equity investments in BESS technology providers or project developers.

Focus on Industrial Heat Application

Aramco’s sole 2025 initiative in battery technology was a Memorandum of Understanding (Mo U) with Rondo Energy to explore thermal battery storage. This targets the decarbonization of industrial heat, a significant source of operational emissions and energy consumption for Aramco.

• The Mo U with Rondo Energy aims to pilot the use of thermal batteries, which store renewable electricity as high-temperature heat for use in industrial processes like steam generation.
• This application directly supports Aramco’s own operational efficiency and sustainability goals, providing an internal, guaranteed use case for the technology.
• By focusing on a novel, long-duration energy storage application for its own facilities, Aramco can test and scale a technology without exposure to electricity market price volatility or grid interconnection challenges.

Battery Energy Storage Market to Reach $110B by 2035
The Battery Energy Storage System (BESS) market is projected to skyrocket from $10.42 billion in 2025 to $110.29 billion by 2035, driven by a substantial 26.61% CAGR (2026-2035). This exponential growth underscores a burgeoning sector ripe for significant investment.

(Source: www.snsinsider.com — via Aramco Energy Storage 2026, 12.5 GWh BYD Contract)

$91.5 B+ in Commitments, Saudi Aramco Prioritizes Gas-Aligned Technologies Over Batteries

Saudi Aramco’s 2025 capital allocation heavily favored technologies that are synergistic with its existing natural gas assets, such as blue hydrogen and carbon capture, with these investments dwarfing its exploratory moves in battery storage. This financial strategy underscores that, for the near term, Aramco’s energy transition path is rooted in monetizing and decarbonizing its vast hydrocarbon reserves rather than diversifying into unrelated clean energy technologies.

Capital Allocation for Blue Hydrogen and CCS

The company made definitive, large-scale investments in infrastructure for blue hydrogen and carbon capture and storage (CCS), technologies that directly leverage its expertise in gas processing and geology.

• In March 2025, Aramco finalized the acquisition of a 50% stake in the Blue Hydrogen Industrial Gases Co. joint venture, solidifying its commitment to producing hydrogen from natural gas with associated carbon capture.
• The company awarded a substantial $1.5 billion contract to Larsen & Toubro in February 2025 for the construction of a major CCS project, aimed at sequestering emissions from its gas processing facilities.

Massive Investment Framework with US Firms

Aramco’s largest announced financial commitment framework in 2025 was directed toward partnerships with U.S. companies, with a clear focus on LNG and other gas derivatives, further cementing its strategic priorities.

• On May 14, 2025, Aramco announced 34 Mo Us with U.S. companies, carrying a potential investment value of approximately $90 billion.
• Key highlighted partnerships within this framework focused on developing LNG and ammonia projects, indicating an investment thesis centered on expanding the global market for its gas resources.

Table: Saudi Aramco 2025 Strategic Investments and Agreements

Saudi Aramco’s 2025 Alliances, Focus on Industrial Synergies and Raw Materials

Partnerships formed by Saudi Aramco in 2025 were strategically designed to build capabilities in adjacent energy sectors and secure upstream positions in future value chains, rather than to achieve immediate entry into the competitive battery market. This alliance strategy prioritizes long-term positioning over short-term market share, focusing on thermal storage for internal use, raw material exploration, and large-scale industrial projects.

Upstream Entry via Mineral Exploration

Aramco initiated a forward-looking partnership with the Saudi Arabian Mining Company (Maaden) to explore the Kingdom’s mineral resources. This move signals a strategic interest in the upstream segment of the battery value chain, potentially positioning Aramco as a future supplier of critical materials.

• The partnership with Maaden, announced as part of the May 2025 U.S. investment forum agreements, aims to assess and develop mineral resources within Saudi Arabia.
• This collaboration could provide Aramco with a secure, domestic supply of materials such as lithium, cobalt, and nickel, which are essential for battery manufacturing.

Industrial and Technology Partnerships

The company’s most significant partnerships focused on technologies that integrate with its core industrial processes or expand the market for its primary products. The Mo U with Rondo Energy is the prime example of using a partnership to solve an internal operational challenge.

• The thermal storage Mo U with Rondo Energy serves as a low-risk method to gain expertise in long-duration energy storage by applying it to Aramco’s own industrial facilities.
• The $1.5 B CCS contract with Larsen & Toubro represents a major execution partnership aimed at decarbonizing existing assets, reinforcing the focus on improving the sustainability of current operations.

Table: Key Saudi Aramco Partnerships and Mo Us (2025)

Saudi Arabia Focus, Saudi Aramco Aligns 2025 Projects with Vision 2030

The entirety of Saudi Aramco‘s 2025 energy transition initiatives were geographically centered within Saudi Arabia, directly supporting the Kingdom’s national Vision 2030 goals. This domestic focus ensures that investments in new energy technologies simultaneously contribute to national economic diversification, industrial development, and mandated decarbonization targets.

Domestic Project Deployment

Major capital projects announced in 2025, from carbon capture to hydrogen production, are located within the Kingdom and integrated with Aramco’s existing domestic infrastructure. This localization maximizes operational synergies and supports the development of a local workforce and supply chain for new energy industries.

• The $1.5 billion CCS project contracted to Larsen & Toubro is designed to capture emissions from Aramco’s industrial facilities within Saudi Arabia.
• The Blue Hydrogen Industrial Gases Co. joint venture is also a domestic project aimed at leveraging the Kingdom’s vast natural gas reserves to produce low-carbon fuels.

Aligning with National Mandates

These domestic projects are directly aligned with Saudi Arabia’s Vision 2030, which calls for generating 50% of electricity from renewables and diversifying the economy away from oil exports. Aramco’s strategy serves as a key implementation vehicle for this national vision.

• By developing industries like blue hydrogen and investing in CCS, Aramco is creating new, non-oil-based revenue streams and industrial sectors for the Kingdom.
• The Mo Us with U.S. firms are structured to attract international technology and capital to Saudi Arabia, accelerating the development of domestic energy and industrial capabilities.

SWOT Analysis, Saudi Aramco’s Cautious Approach to Energy Storage (2025)

Saudi Aramco’s 2025 strategy for energy storage and batteries reflects a deliberate and risk-averse approach, leveraging its immense financial strength and project execution capabilities to explore the energy transition on its own terms. This method prioritizes decarbonizing its core business and securing upstream positions, yet it also creates a potential long-term vulnerability by delaying direct entry into high-growth clean energy markets like BESS.

Table: SWOT Analysis for Saudi Aramco Energy Storage and Battery Initiatives

Saudi Battery Storage Imports Quadruple in Four Years
The Saudi Arabia Battery Energy Storage market’s import value surged from USD 19,000 thousand in 2020 to approximately USD 75,000 thousand in 2024, representing a significant CAGR. Year-on-year growth peaked at an impressive 113.87% in 2023 before moderating to 43.56% in 2024, indicating robust, albeit stabilizing, expansion.

(Source: Aramco Energy Storage 2026, 12.5 GWh BYD Contract)

Scenario Modeling, Saudi Aramco’s Rondo Energy Mo U and the LDES Market

The most critical signal for Saudi Aramco’s future energy storage strategy is the progression of its Memorandum of Understanding with Rondo Energy. If this Mo U converts into a funded pilot project in 2026, it will validate the company’s near-term approach of using Long-Duration Energy Storage (LDES) primarily as a tool for industrial decarbonization, not for grid-scale electricity market participation.

Near-Term Trajectory and Key Signals

The conversion of the Rondo Energy Mo U to a tangible project would signal a clear, internally focused trajectory for Aramco’s storage ambitions.

• If this happens: Aramco announces a pilot project to install a Rondo thermal battery at one of its industrial facilities, such as a refinery or gas plant.
• Watch this: Subsequent announcements for similar thermal storage deployments at other Aramco sites, or new partnerships with other LDES providers targeting industrial heat.
• This could be happening: Aramco is building a replicable, internal playbook for decarbonizing its industrial heat load, creating a captive market for LDES technologies while sidestepping the complexities of the power sector.

Potential Long-Term Strategic Shifts

While the near-term focus is internal, other signals could indicate a broader strategic shift toward becoming a major player in the global energy storage value chain.

• If this happens: The joint exploration with Maaden leads to a significant investment or offtake agreement for battery-grade minerals like lithium or cobalt.
• Watch this: An acquisition or major venture capital investment by Aramco in a battery manufacturing or materials processing company, moving it downstream from raw materials.
• This could be happening: Aramco is executing a long-term, vertically integrated strategy to first secure the raw material supply and then build or acquire its way into the battery manufacturing ecosystem, leveraging its immense capital to enter the market at scale.

The questions your competitors are already asking

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