Arabian Pipes Co.: Riding the Carbon Capture Wave to Structural Growth in Saudi's Energy Transition

The energy transition is not just about solar panels and wind turbines—it's also about the unsung heroes of infrastructure. Arabian Pipes Co. (APC), a Saudi-based steel pipe manufacturer, is quietly positioning itself at the epicenter of Saudi Arabia's net-zero ambitions through a series of escalating contracts with Aramco. With deals totaling over SAR 600 million since 2023, APC's role in critical projects like the Jubail carbon capture hub signals a structural growth story that investors should not overlook.

The Escalating Contract Pipeline: A Blueprint for Growth

APC's recent contract wins with Aramco reveal a clear pattern of rising value and strategic importance:
- September 2023: A SAR 204 million deal to supply steel pipes and coatings over 16 months, impacting earnings through Q2 2025.
- May 2025: A SAR 104 million contract for Jubail's carbon capture project, with financial contributions expected into Q1 2026.
- Prior Deal (202X): A SAR 322 million contract underscores APC's long-standing partnership with Aramco, though the exact timing remains unspecified.

These contracts are not merely one-off wins. They are milestones in APC's evolution from a mid-tier supplier to a critical partner in Saudi's energy infrastructure overhaul. The Jubail project, which aims to capture 9 million metric tons of CO₂ annually by 2027, is a linchpin of Aramco's net-zero strategy—and APC's pipes are the veins that will carry this CO₂ to storage sites.

Why Jubail Matters: A Catalyst for Saudi's Vision 2030

The Jubail carbon capture hub is more than an environmental project—it's a geopolitical and economic masterstroke. By 2035, Saudi Arabia aims to sequester 44 million metric tons of CO₂ annually, a target that requires relentless infrastructure investment. APC's role here is twofold:
1. Technical Expertise: The project demands high-pressure, corrosion-resistant pipes capable of handling CO₂ transport—a niche APC has mastered.
2. Strategic Synergy: Jubail's success will unlock opportunities for blue hydrogen, ammonia, and industrial decarbonization, all of which rely on APC's pipeline infrastructure.

This aligns perfectly with Saudi Vision 2.0 (2030), which prioritizes energy diversification and job creation in the Eastern Province. For APC, this means recurring demand: Phase 1 of Jubail alone could expand to 8 million metric tons of storage by 2035, with APC's pipelines likely to be the first call for upgrades.

Contrasting with Aramco: Why Mid-Tier Contractors Are Winning

While Aramco's net profit fell 29.5% in early 2023 to SAR 232 billion, APC turned a profit in H1 2024 (SAR 46.6 million vs. a loss in 2023). This divergence is no accident. Aramco's scale exposes it to oil price volatility, geopolitical risks, and capital allocation dilemmas. Mid-tier contractors like APC, however, benefit from:
- Contract Visibility: APC's deals are short-term (9–16 months), ensuring steady cash flows.
- Sector Tailwinds: Carbon capture, hydrogen, and industrial projects are funded by sovereign wealth, insulating APC from commodity cycles.
- Operational Focus: APC can specialize in niche areas (e.g., CO₂ pipelines) without the bureaucratic drag of a megacorporation.

The Investment Case: Buy the Dip, Own the Transition

APC's stock is primed for upside. Consider these catalysts:
1. 2025–2026 Earnings Boost: The SAR 104M Jubail contract alone will drive results into early 2026, with more deals likely in the pipeline.
2. Valuation Discount: APC trades at a fraction of its peers' multiples, despite its critical role in Saudi's net-zero agenda.
3. Capital Allocation: The company's recent capital increase (approved via an Extraordinary General Meeting) signals confidence in scaling operations to meet demand.

Risks to Consider

• Project Delays: Jubail's Phase 1 completion hinges on regulatory approvals and global supply chains.
• Commodity Costs: Steel prices could squeeze margins if inflation resurges.
• Contract Concentration: Over-reliance on Aramco poses execution risk if projects are scaled back.

Final Verdict: A Long-Term Play with Near-Term Catalysts

APC is not just a beneficiary of Saudi's energy transition—it's a core enabler. With contracts underpinning earnings through 2026 and a pipeline of projects tied to Vision 2030, this is a rare growth story in an otherwise volatile sector. While Aramco's profits gyrate with oil prices, APC's steady contract wins offer a safer, higher-growth profile.

For investors seeking exposure to Saudi's net-zero pivot, APC's stock is a buy. The carbon capture wave isn't just rising—it's becoming a tsunami.