Unlikely allies: Oil brings Saudi king to Moscow

Marie Harrington
October 6, 2017

Oil prices rose on Thursday on signs that Saudi Arabia and Russian Federation would limit production throughout next year outweighed record U.S. exports and the return of production at a major Libyan oil field. According to representatives of the Kremlin, issues of defense cooperation between Russian Federation and Saudi Arabia are going to be discussed as well.

The two countries also signed a deal to set up a $1 billion joint investment fund.

Russian Federation and Saudi Arabia, despite their differences, have been drawn together by a common interest in propping up flagging world oil prices, and by the fact that Moscow, since its military intervention in Syria, has clout in the Middle East that other players in the region can not ignore.

Novak reminded that 24 countries are participating in the oil production cut agreement, and added that other countries are welcome to participate.

"Eighty-five heads of the largest companies flew to Russia to establish links with Russian businesses and expand ties in all areas", the minister said.

"The Russians have gone out of their way to welcome the Saudi King, hoping to open a new page in relations with the wealthy kingdom", said Fawaz Gerges, professor of International Relations at the London School of Economics.

The plan to float around 5 percent of Aramco in an initial public offering (IPO) is a centerpiece of Vision 2030, a wide-ranging reform plan to diversify the Saudi economy beyond oil which is being championed by Saudi Crown Prince Mohammad bin Salman.

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The huge Saudi investment will fund and contribute towards both technology and energy projects, including the construction of a small hydro power plant, logistics companies and building complexes.

"The partnership with one of Saudi Arabia's biggest petrochemical companies will allow Sibur to develop its expertise and sales areas and to study.the Middle East market", Sibur Chairman Dmitry Konov said.

At the same time, the volume of trade between Russian Federation and Saudi Arabia remains low.

Saudi Arabia is now investing over $1 billion in over 20 Russian projects including the construction of a petrochemical complex and Pulkovo Airport in St Petersburg, Russian Energy Minister and co-chairman of the Russian-Saudi Intergovernmental Commission Alexander Novak said.

The report came during a visit by Saudi King Salman to Moscow. More than 200 companies intend to cooperate in the forum, including the world's largest oil producer Saudi Aramco, as well as Gazprom Neft, Sibur, Aeroflot and Phosagro of Russian Federation.

Falih said MoUs would be signed with Russia's state nuclear agency Rosatom for the peaceful use of nuclear energy, alongside other deals for military industries and marine development.

"The oil market is balancing step by step, Russian Federation is achieving its goals in agreement with OPEC".

Other reports by TheSundaySentinel

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