It has been 18 months since national energy company Petroliam Nasional Bhd (Petronas) announced its foray into the venture capital space with the setting up of a US$350 million fund. Its corporate venture capital arm Petronas Ventures has been working hard and now has three local and nine overseas start-ups under its belt.
“We were seeing global megatrends, in which the rapid pace of energy transition was very much driven by breakthrough technologies and sustainable solutions. These developments have been keeping us busy,” says Arni Laily Anwarrudin, head of Petronas Ventures. “Now, we are working towards deploying some of these technologies into the group.”
Set up in late 2018 and announced in 2019, Petronas Ventures is the national energy company’s “feeler” for technologies, for which US$250 million has been allocated to the US and Europe and another US$100 million to Asia-Pacific over the next 10 years.
Petronas Ventures “tests what’s out there, which could complement” the parent company’s three mid- and long-term targets, with potential investments anchored to three key pillars: the Future of Facilities, the Future of Chemicals and Advanced Materials, and the Future of Energy.
“Our KPI is more strategic in nature, focusing on the prospects of improving the group’s efficiency, establishing new growth areas and addressing immediate pain points,” says Arni.
Innovation is not foreign to energy companies. For example, services outfit Baker Hughes had been awarded more than 3,000 patents, according to its 2020 annual report. Locally listed firms like Uzma Bhd, Serba Dinamik Holdings Bhd and Dialog Group Bhd also take pride in developing their own technologies to compete with their larger counterparts.
With Petronas’ footprint across the oil and gas value chain, which includes exploration, production, refineries, petrochemicals, marketing and retail, transport and lubricants, it makes sense for the Fortune 500 company to also secure a front-row seat on the technological front.
“We aim to invest in the best disruptors in accelerating innovative solutions and shaping the future of energy. All these disruptors will improve how we observe, strategise and execute at Petronas,” says Arni.
In Malaysia, Petronas Ventures has invested in Iraya Energies, which converts unstructured data into actionable insights for exploration and production activities; SOLS Energy, a one-stop solar photovoltaic solutions company with an innovative financing model; and Braintree Technologies, which focuses on automated farming solutions via artificial intelligence-driven software and agriculture robots.
“With Iraya Energies, for example, we utilised existing operations to test its proof of concept, which resulted in expedited decision-making for upstream exploration activities in Mexico,” says Arni.
These investments are in line with Petronas’ Sustainability Agenda and the United Nations’ Sustainable Development Goals (SDGs) 4, 7, 8 and 13, which focus on the provision of quality technical education to the youth, promotion of sustainable economic growth as well as reduction in greenhouse gas emissions via the generation of clean energy.
Through its partner, Piva Capital Inc (PIVA) in the US, Petronas Ventures has exposure to nine start-ups that are involved in an array of industries, from food additives and agriculture to speciality chemicals, 3D printing, low-carbon cement and metal manufacturing, electronics, remote sensing and AI.
Petronas Ventures also invests in various venture capital funds across the region, alongside other co-investors to have better access to different venture capital ecosystems and provide a more competitive proposition for investee companies.
Arni says, “At this stage, we collaborate with companies with proven technologies and commercially viable products, thus eliminating the technical risks. We take on the commercial risk in helping these local talents scale up.
“Ultimately, we want to create synergies between these companies, as well as provide valuable access to technical and business experts, not just to grow the technology, but also the company as a business.”
One of the more exciting news at home will be the return of Petronas’ Accelerator Programme — PETRONAS FutureTech 2.0 — in the second half of this year.
Its 2019 edition saw Petronas partnering with a Silicon Valley venture capital firm. Twenty local start-ups were selected to undergo an eight-week accelerator programme aimed at encouraging local innovations and supporting Malaysian entrepreneurs.
“This time, we are hoping to rope in corporate partners. This synergy will open up possibilities and maximise benefits for the start-ups to accelerate their business and scale up to global standards,” says Arni.
“We will also further leverage PIVA, our connection in the US, to link some of the local start-ups with their overseas counterparts and to obtain insights from educators and industry players there.”