FILE PHOT: An Aramco employee walks near an oil tank at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. Picture taken May 21, 2018. REUTERS/Ahmed Jadallah/File Photo

Saudi Arabia’s national oil company is considering a $1 billion venture-capital fund to invest in international technology firms, according to people familiar with the proposal, as the kingdom deepens efforts to diversify its economy.

Saudi Arabian Oil Co., better known as Aramco, is weighing a fund to make multimillion-dollar investments in technologies that complement the oil giant’s operations and is also considering opening an office in Silicon Valley or elsewhere in the U.S. to generate deals, the people said.

Aramco already invests in startups and high-growth firms in the energy space via its $500 million Saudi Aramco Energy Ventures fund and the Aramco Entrepreneurship Center, which has roughly $200 million to deploy early-stage capital in local Saudi companies.

The new fund would buy into technologies that benefit Aramco’s sprawling operations but don’t necessarily focus on energy, the people familiar with the venture said. Aramco wants to locate tech firms in Saudi Arabia to create jobs, although that goal isn’t the primary reason for establishing the fund, the people added.

The new fund hasn’t been finalized. Saudi Arabia has broached big plans for modernizing its economy and business culture without following through on some, including a proposed IPO of Aramcothat has been indefinitely delayed.

A spokesman for Aramco declined to comment.

Aramco’s plans are Saudi Arabia’s latest attempt to transform into an innovation juggernaut. More broadly, the kingdom has bet billions of dollars on technologies that can hedge against a potential decline in the demand for oil—the country’s biggest revenue source and the thrust of its economy.

Saudi Arabia has committed $65 billion to two outside funds—one for infrastructure investment managed by Blackstone Group LP and $45 billion for a technology fund led by SoftBank Group . Its sovereign-wealth fund has also splashed more than $4 billion on Silicon Valley startups including Uber Technologies Inc. and Magic Leap Inc., and taken a nearly 5% stake in publicly-owned Tesla Inc.

A new fund would put Aramco at the center of Saudi plans to use technology to transform the economy, mirroring its historical role as the country’s most reliable executor of important projects, said Helima Croft, managing director and global head of commodity strategy at RBC Capital Markets.

“It makes a lot of sense to tap Aramco to do this,” said Ms. Croft. “They were always the go-to if you needed to get something done.”

Last month, Aramco paid $1.74 billion for the 50% it didn’t already own in the Dutch high-tech tire maker Arlanxeo. Saudi Aramco Energy Ventures has invested in roughly 30 companies, including a Silicon Valley startup that converts gas to chemicals and a German firm that creates parts of solar panels, according to its website. The oil giant’s entrepreneurship center, also known as Wa’ed, has written 17 checks for stakes, including for a perfume e-commerce platform, a payments system and a medical booking site, according to tech website Crunchbase.

Aramco and Saudi energy ministry officials have held talks on developing data-center hubs with U.S. technology companiesAlphabet Inc., Google’s parent, and Amazon Web Services, part ofAmazon.com Inc.

The U.S. Patent and Trademark Office granted Aramco 230 patents last year, four times as many as in 2013. Aramco’s most recent patents have included fluids to break rocky oil formations using micro-particles, a docking station for mobile robots deployed in oil fields and techniques to remove carbon from fuels.

—Benoit Faucon contributed to this article.

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