Saudi Arabia and Russia are set to form a new alliance for investments in energy and infrastructure, according to Russia's Energy Minister Alexander Novak on Monday.
Saudi Arabian Energy Minister Prince Abdulaziz bin Salman and his Russian counterpart Novak discussed Russian and Saudi bilateral cooperation and relayed their standpoint on global oil markets in a panel at the Saudi-Russian Energy Forum in Riyadh.
Novak said that investment cooperation is one of the key growth points for the two countries' economic relations following on from the $2.5 billion worth of investments that have already been made through joint projects in Russia.
"The partnership with Saudi Arabia can bring tangible benefits for both sides, and working with the Kingdom on oil and gas is the first step toward a new alliance," Novak said during the forum ahead of Russia President Vladimir Putin's visit to Saudi Arabia.
Riyadh and Moscow are expected to announce 10 new investment projects in the oil and technology spheres on Monday.
Last Tuesday saw the Russian Direct Investment Fund's (RDIF) announcement that the fund would open its first overseas office in Saudi Arabia to facilitate its ongoing deals and projects with its partners in the country.
The total committed capital of the two countries' sovereign wealth funds has reached $6 billion for future projects, according to the Russia-Saudi Investment Fund.
"We will sign many agreements on the margins of this [Putin's] visit, Novak explained adding that energy is one of the most promising areas for collaboration along with railroads and the industrial sector.
Cooperation between the Organization of the Petroleum Exporting Countries (OPEC), and OPEC+, a group of 10 non-OPEC oil producing nations that have joined OPEC to coordinate oil production policy, is also on the table, Novak said.
This cooperation, he said is in line with the OPEC+ oil pact agreement, which aims to stabilize global energy markets and protect oil producing countries from any turbulences.
-New Saudi-Russian investment projects
King Salman pledged billions of dollars for the Russian petroleum industry in a visit to Russia two years ago. This included investing money into Novatek’s Arctic 2 liquefied natural gas complex and Russia’s largest petrochemical facility, Sibur. He also promised to fund Eurasia Drilling, Russia’s largest private oil and gas drilling subcontractor.
Saudi Arabia has so far invested $2.5 billion of the $10 billion investment pledge into a number of Russian sectors, including energy, infrastructure and technology.
"Sibur [petrochemicals company] is exploring the possibility of building a facility” in Saudi Arabia with investments of more than $1 billion," Putin said on Monday, in the hope that warming ties will prompt the Saudis in funding more than this figure for its petroleum sector.
Saudi Aramco had also taken steps earlier this year to invest in Novomet, a Russian oilfield services company, in order to boost Russia's energy industry.
From January to June 2019, Russian-Saudi trade turnover increased 28% to $637.7 million compared to the same period in 2018, according to Novak.
By Busranur Begcecanli