Saudi Aramco, the world's largest energy company, and Alphabet, Google's parent organization, have reportedly entered discussions to create a technology hub in Saudi Arabia, according to the Wall Street Journal.
The kingdom is embarking upon an ambitious project, known as Vision 2030, led by the 32-year-old Crown Prince Mohammed bin Salman, to diversify the nation's oil-dependent economy. The foundation of the effort is a plan to create a huge sovereign wealth fund, underwritten by selling shares in the state-owned Aramco.
The initial public offering (IPO), which experts predict to happen this year, is expected to be the world's biggest-ever share sale. Aramco President and CEO Amin Nasser recently told CNBC that his company is ready for the IPO this year but is waiting for the government to choose an international list venue.
"Talks between Aramco and Alphabet have been ongoing for months"
Alphabet and Aramco have discussed forming a joint venture that would build data centers around the kingdom, sources familiar with the matter told the US-based WSJ.
It remains to be seen which customers the data centers would serve and how large the joint venture would be, but it could be listed on the Saudi stock exchange Tadawul, the sources said.
The talks have been ongoing for months and have involved Alphabet CEO Larry Page, the WSJ wrote. Sources reportedly told the WSJ that it could soon sign a $1 billion deal to build three data centers in Saudi Arabia, with the deal expected to be announced during King Salman's anticipated visit to the United States this year.
Expansion into operating data centers would mark a significant step toward diversification
King Salman and his son Crown Prince Mohammed bin Salman are the driving force behind Saudi Arabia's Vision 2030, a plan to overhaul the economy with a greater focus on the technology sector.
A network of data centers could provide the backbone for a burgeoning tech industry in the kingdom. The WSJ also noted that data centers in Europe currently service Saudi Arabia via undersea cables, an arrangement that slows down traffic.
Saudi Aramco is primarily focused on pumping oil and refining it into products like gasoline. It has plans to grow its business producing chemicals and plastics, but those are byproducts of fossil fuels.
An expansion into operating data centers would mark a significant step toward diversification.