Saudi Arabian, Russian energy ministers discuss partnerships and OPEC+ in Riyadh

Saudi Arabian Energy Minister Prince Abdulaziz bin Salman and his Russian counterpart Alexander Novak discussed on Monday the two countries’ ongoing partnerships, as well as their outlook for global oil markets.

“We will sign many agreements on the margins of this visit,” said Russian Energy Minister Alexander Novak at the Saudi-Russian CEO Forum in Riyadh.

“We have greater possibility to cooperate on railroads and other new dimensions which require our cooperation, especially in industry,” Novak added in his keynote speech at the forum.

Russia is the largest OPEC+ producer, a group of 10 non-OPEC nations which have joined with OPEC to coordinate policy. The Organization of Petroleum Exporting Countries (OPEC) is made up of 15 oil producers including Saudi Arabia, the UAE, Venezuela, and Nigeria.

“As for energy, there will be a bilateral cooperation between the two countries, cooperation between OPEC, OPEC+ under the agreements of OPEC+ which provides stability to the global energy markets and protects us from any turbulences and this gave the world global markets stability, there’s also great cooperation,” Novak said.

In December last year, OPEC and non-member countries announced a supply reduction of 1.2 million barrels per day from January 1 this year as a measure to support market prices, a policy which dates back to 2017.

The question of whether these supply cuts will increase will be a key topic for the market to watch for in the upcoming meeting of OPEC and its allies in April 17-18.

“The most important measure… if there was no cooperation… what would the price be?” said Prince Abdulaziz in a panel at the Saudi-Russian CEO Forum, moderated by Al Arabiya. “It would be much less than it is now.”

“Oil prices have to be stable, sustainable and to enter these long period volatility does not enhance investments,” Prince Abdulaziz told Al Arabiya during a panel at the forum.

On this topic, OPEC Secretary-General Barkindo said last week that it was too early for OPEC to discuss deeper oil output cuts, despite a decline in oil prices.

Strategic partnership

Investment commitments have also deepened between Russia and Saudi Arabia. Kirill Dmitriev, the CEO of the Russian Direct Investment Fund (RDIF), the country’s sovereign wealth fund, is among the Russian delegation to Saudi Arabia.

The RDIF announced last Tuesday that the fund would open its first overseas office in Saudi Arabia in order to facilitate its ongoing deals and projects with its partners in the country.

Saudi Aramco, which is expected to list the first stage of its blockbuster initial public offering later this year, and the fund are mulling projects in the oil services sector with a total investment value of over $1 billion, and in the oil and gas conversion segment worth over $2 billion.

Meanwhile on Sunday, Russian President Vladimir Putin told Al Arabiya that the country’s largest petrochemical company, Sibur, is “exploring the possibility of building a facility” in Saudi Arabia with investments of more than $1 billion.

This announcement comes after TMK, Russia’s largest maker of steel pipes for the oil and gas industry, announced at Russia Energy Week earlier this month that it too was prepared to become an investor in Saudi Arabia.

So far, Russia and Saudi Arabia have funded and approved bilateral projects worth $2.5 billion across several sectors, including artificial intelligence, infrastructure, transport, and medicine. Observers expect this figure to increase during the Russian authorities’ visit to the Kingdom.

The discussion comes amid Russian President Vladimir Putin's first official visit to Saudi Arabia in 12 years.