PETRONAS to end sponsorship of Mercedes-AMG F1 team after 2021 season

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PETRONAS to end sponsorship of Mercedes-AMG F1 team after 2021 season

The PETRONAS name will be absent from the racing cars of the successful Mercedes-AMG Formula 1 team after this year’s championship ends. It has been confirmed that the team, which has won 7 world championships, will no longer have Malaysia’s national oil corporation as its title sponsor. This comes after over 10 years of association between the team and the oil company, although its involvement in F1 goes back as far as 1995. The latest development follows Petronas’ ending of their MotoGP title sponsorship at the end of this year and no longer being associated with the Yamaha SRT team.

Over the years, Petronas has used its association with Formula 1 for many marketing activities, leveraging on the development efforts in fuels and technology. More than 50 engine oils, transmission fluids and hydraulic fluids have been developed for the racing cars to use in extreme conditions. The technologies and knowledge from such developments have eventually been used to develop commercial products for sale to the public.

It would certainly have been very expensive and while Petronas products are available in around 65 countries, many may not know it is a Malaysian company (although ‘MALAYSIA’ has occasionally been put on the cars. But the same can also be said of other major sponsors like Repsol, Santander and certainly, not many of the 500 million people who watch F1 worldwide will be aware that the ORLEN which sponsors the Alfa Romeo F1 team is a Polish petroleum company. Brands like Marlboro, Rolex and even Dell would have more global presence and recognition. But Petronas believes the money has been well spent: in 2016, it estimated the value of brand exposure in F1 from 1995 was worth more than US$900 million.

Saudi Aramco to take over as title sponsor?
In place of Petronas, Mercedes-AMG is expected to have another oil company – Saudi Aramco. As the main company operating in Saudi Arabia, it has the world’s largest network of oilfields and its revenues are chart-topping. Saudi Aramco (which stands for Arabian American Company) is state-owned and was established in 1933. Described as an integrated oil and gas company, it is mainly in upstream activities and has no visible internationalpresence in consumer products, unlike most other oil companies. It does, however, have a network of fuel and service stations (in partnership with Total of France) in Saudi Arabia.

Saudi Aramco, which has been operating for 88 years, is active mainly in upstream oil and gas activities. It also has a network of fuel and service stations under the Sahel brand which is in partnership with Total of France.

The tie-up with Mercedes-AMG is the second major involvement in F1. Last year, Saudi Aramco announced a long-term global sponsorship with the sport, its first global sponsorship of a major sporting event.

“We are excited to partner with Formula 1, a strong global sports brand with millions of fans around the world. As the world’s largest energy supplier and an innovation leader, we have the ambition to find game-changing solutions for better-performing engines and cleaner energy. Partnerships like these are important to help us to deliver on our ambitions,” said Saudi Aramco’s CEO & President, Amin H. Nasser.

Involvement in F1 since 1980s
Saudi Aramco’s involvement in F1 is not Saudi Arabia’s first association with the sport. Older readers will remember that, in the 1980s, Saudia Airlines (the country’s national airline) sponsored the Williams team. Though the Saudia name was the most prominent, Frank Williams also managed to get eight other supporters from Saudi Arabia’s growing business community.

*Saudia Airlines was one of the Saudi Arabian companies that were sponsors for the Williams F1 team in the 1980s.*

The group included TAG (Techniques d’avant Garde), an advanced technology company which was founded by a Saudi businessman. TAG (which bought over the Heuer watchmakers) first sponsored Williams and the McLaren. Today, it also has a major share in the McLaren Group. More recently, TAG Heuer has been a major partner in the all-electric Formula E series as well, along with Saudia Airlines.

Major motorsports events in Saudi Arabia
The country’s ‘Vision 2030’ is also bringing Saudi Arabia into the 21st century and its society is changing, eg women have been allowed to drive cars since 2018. As a result, it has attracted three major motorsports events to be run in the country to boost tourism. The Dakar Rally and Extreme E Desert X-Prix, which were run in the deserts for the first time in 2020 and 2021, respectively, and later this year, the first ever F1 race in the streets of Jeddah. All are significant events which will be widely publicized, and organisers have made deals to run them over a number of years.