Saudi Arabia looks at buying oil and gas assets in Russia
KUWAIT: Saudi Arabia is looking at unprecedented deals to acquire oil and gas assets in Russia, deepening ties between the world’s largest energy exporters as the Saudi king prepares to visit Moscow later this week.
Organisation of Petroleum Exporting Countries’ (Opec) biggest crude producer is considering investing in Russia’s largest oil drilling contractor, Eurasia Drilling Co, and Novatek PJSC’s proposed Arctic LNG 2, according to officials with knowledge of talks, who asked not to be identified because the talks are private.
While discussions are at an early stage, some framework accords could be signed during King Salman bin Abdulaziz’s trip, one of the officials said.
Saudi Arabia and Russia produce almost a quarter of the world’s oil between them and led an historic agreement between Opec and other major suppliers last year to cut output and help end a global glut of crude.
Direct Saudi investment in Russian assets would show continued commitment to cooperation between the two energy superpowers as Salman and Russian President Vladimir Putin prepare for talks that are likely to include whether to extend the pact on oil production limits.
Salman is scheduled to meet Vladimir Putin in Moscow tomorrow, while a delegation travelling with him, including Saudi Arabian Energy Minister Khalid Al-Falih, will participate in an investment forum the same day.
Final agreements are subject to due diligence and are establishing that the deals don’t violate any international sanctions against Russia, one official said.
Investments with Eurasia and Novatek aren’t the only deals on the table. Saudi Arabian Oil Co, or Aramco, is in talks with Sibur Holding PJSC, Russia’s largest petrochemical producer, about forming a joint venture to make synthetic rubber in the desert kingdom, two people with knowledge of the discussions said last month.
Saudi Energy Minister Al-Falih told reporters during his first Opec meeting last summer that Saudi Aramco would consider investing in upstream projects abroad after the company went public, focusing mainly on developing natural gas. He didn’t rule out importing gas into the kingdom. The state-run giant plans to sell shares to investors by the end of 2018.
Saudi investment in Russian gas production would mirror an earlier, unsuccessful joint venture when Lukoil PJSC spent more than a decade fruitlessly trying to develop gas deposits in Saudi Arabia’s barren Empty Quarter.
Novatek, which aims to launch its first liquefied natural gas (LNG) plant in the Arctic in November, is planning the second project to follow in 2022 or 2023, making it Russia’s biggest LNG producer. — Bloomberg