• Horse Powertrain investment both financial and strategic, Mufti says
• Aramco targets M&A in downstream, LNG
• Extends cooperation with Aston Martin in Formula 1
• Investing "hundreds of millions" in e-fuel demo plants

MILAN, Sept 3 (Reuters) - State-controlled oil company Saudi Aramco (2223.SE) , opens new tab 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 (RENA.PA) , opens new tab and Geely (GEELY.UL) 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(600346.SS) , opens new tab.

Aramco on Tuesday also announced it was broadening its partnership with the Aston Martin (AML.L) , opens new tab 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 , opens new tab 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)

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https://www.reuters.com/markets/deals/aramco-still-pursuing-deals-while-keeping-renault-geely-engine-jv-stake-10-2024-09-03/