*

Horse Powertrain investment both financial and strategic,

Mufti

says

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Aramco targets M&A in downstream, LNG

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Extends cooperation with Aston Martin in Formula 1

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Investing "hundreds of millions" in e-fuel demo plants

By Giulio Piovaccari

MILAN, Sept 3 (Reuters) - State-controlled oil company

Saudi Aramco does not plan to increase its 10% stake

in fuel-based engines joint venture Horse Powertrain while it

continues to pursue more deals to expand its downstream

presence, a senior executive told Reuters.

Aramco in June agreed to buy a 10% stake in Horse

Powertrain, valuing the venture with Renault and Geely

at around 7.40 billion euros ($8.2 billion), as part

of its growing interest in the automotive industry, including in

the development of so called e-fuels.

"The 10% stake hits all of the boxes that we have for our

financial and strategic objectives for this company," Yasser

Mufti, Aramco's executive vice president for products and

customers, said in an interview in Milan, where he was to follow

Formula 1 Grand Prix in Monza at the weekend.

"I saw a lot of speculation about that but we were always

targeting a 10% stake," he said, in the first public comments by

a senior Aramco executive on the company's plans for the Horse

Powertrain joint-venture.

Geely and Renault will each own 45% of the venture, which

will supply gasoline engines, hybrid systems and gearboxes for

internal combustion engine vehicles.

Aramco, the world's top oil exporter, is expected to

finalise the stake purchase later this year.

Horse Powertrain aims to become a global supplier for

automakers, which can buy "off-the-shelf" engines compatible

with advanced fuels, Mufti said. "By 2050, half the (global

auto) fleet will still be conventional combustion engines or

hybrids".

More M&A deals will come for Aramco, after those it closed

in the past 12 months, which include the purchases of Chilean

fuel retailer Esmax and of stakes in Gas & Oil Pakistan and

U.S.-based MidOcean, its first LNG investment abroad.

"We're very busy in this space," Mufti said.

"The downstream business is where we have M&A opportunities

and now LNG (liquefied natural gas) as well. We have targets and

markets and we work with these opportunities as they come."

Downstream refers to refining, and sales and marketing of

oil and gas products.

Last year, Aramco spent around $9 billion on acquisitions,

up from $4.2 billion in 2022, according to LSEG data, and is now

discussing more deals, including acquiring stakes in China's

Shandong Yulong Petrolchemical and Hengli

Petrochemical.

Aramco on Tuesday also announced it was broadening its

partnership with the Aston Martin Formula 1 team, ahead

of the 2026 implementation of new Formula 1 regulations,

including requirements for sustainable fuels.

Mufti said Aramco was investing "hundreds of millions" to

build two demonstration facilities with partners in Saudi Arabia

and Spain, to develop e-fuels, that can be used in internal

combustion engine vehicles and help reduce carbon footprint.

Made by synthesizing captured CO2 emissions and hydrogen

produced using renewable or CO2-free electricity, e-fuels are

not cheap. Their estimated cost is of 2 euros per litre if

produced at scale, four times the typical wholesale price for

petrol made from oil.

The two facilities would be "excellent starting points" to

help Aramco understand how to scale up e-fuels production and

bring costs down, Mufti said. "I can be 100% confident that the

current cost structure will be improved on dramatically".

Costs of making e-fuels could fall to between 0.70-1.33

euros per litre in 2050, according to lobby group eFuel

Alliance.

($1 = 0.9035 euros)