Saudi Arabia and Russia sign investment and arms deals
SALMAN AND PUTIN AGREE ON THE NEED TO PRESERVE SYRIA’S TERRITORIAL INTEGRITY
S audi King Salman Bin Abdul Aziz met with Russian President Vladimir Putin in Moscow — the first ever visit by a Saudi monarch — where the two leaders signed a slew of investment deals.
The two countries have often been on opposing sides of regional conflicts, but analysts say the two leaders have decided that cooperation could benefit both.
The leaders also signed a weapons deal, marking a significant change in Saudi policy which has historically been loyal to Washington.
Saudi Arabia has initially agreed to buy Russian S-400 surface-to-air missile systems.
Saudi Arabia, which has long complained of Iran’s meddling in the affairs of Arab states, hopes that by negotiating with Moscow it could possibly reduce Iran’s influence in the region, particularly in Syria, Yemen, Lebanon and Iraq.
During their meeting, King Salman told Putin that Iran must stop meddling in regional affairs.
Russia and Syria are on opposing sides of Syria’s six-year civil war with Moscow backing Syrian President Bashar Al Assad and Saudi Arabia supporting rebels who were trying to oust him. The two countries agreed on the need to preserve Syria’s territorial integrity and state institutions and to fight terrorism.
Saudi Arabia is working closely with Russia on uniting Syria’s opposition, Saudi Foreign Minister Adel Al Jubeir said, adding that both Russia and Saudi Arabia believe in the principle of non-interference in other countries’ internal affairs and in the principle of territorial integrity.
The Saudi King gave a positive assessment of the Russian-sponsored Astana process on settling the Syria conflict, Russia’s Foreign Minister Sergei Lavrov said.
On the economic front, the two countries signed an agreement in the Kremlin on the creation of a $1 billion joint investment fund.
Separately, Russian sovereign wealth fund RDIF and Saudi Arabia’s Public Investment Fund signed an agreement to invest up to $100 million in transport projects in Russia.
RDIF said Abu Dhabi’s stateowned Mubadala fund would also co-invest in the holding company.
We emphasise that the security and stability of the Gulf region and the Middle East is an urgent necessity for achieving stability and security in Yemen. This would demand that Iran give up interference in the internal affairs of the region, to give up actions destabilising the situation in this region.” Salman Bin Abdul Aziz | King of Saudi Arabia
President Vladimir Putin held talks with Saudi King Salman Bin Abdul Aziz, who’s making a historic first visit to Russia by a monarch of the kingdom as the two energy superpowers seek agreement on whether to extend a deal curbing oil supplies.
The Kremlin summit is a “landmark event” that will give a “good impetus” to bilateral relations, Putin told King Salman yesterday.
The king said that Saudi Arabia wanted to continue cooperation with Russia in order to maintain stability on the world oil market.
The Saudi courtship of Russia reflects a convergence of interests between the world’s two largest oil exporters as the output pact between the Organisation of Petroleum Exporting Countries and non-Opec producers has spurred a recovery in crude prices.
King Salman’s journey to Moscow, ahead of planned talks with President Donald Trump in Washington early next year, is also a recognition by Riyadh of the changing political balance in the Middle East after Putin successfully countered indecisive US efforts to topple Syrian leader Bashar Al Assad.
King Salman, who arrived for the four-day state visit late on Wednesday, called Russia a “friendly” country.
He told Putin, who accepted the king’s invitation to visit Saudi Arabia, that their talks will boost the global economy as well as aid international stability and security.
Putin said on Wednesday that Russia may agree to extend the oil-supply agreement with Opec to the end of 2018, though he’ll wait to make a decision until nearer the expiry of the existing pact in March.
Saudi Arabia will secure Russian backing to prolong the oil agreement that took effect in January, “but the Kremlin will insist that the deal include some form of tapering,” Eurasia Group analysts including Ayham Kamel, Middle East and North Africa practice head, said in an emailed note.
The visit “will lay the foundation for strategic cooperation that transcends energy issues, though the Saudis have no intention of abandoning their deep partnership with the United States.”
Cooperation between Russia and Saudi Arabia “breathed life back into Opec” and made his country more optimistic about the outlook for oil than it has been for several years, Saudi Energy Minister Khalid Al Falih said after meeting with his Russian counterpart Alexander Novak yesterday. The “success of this collaboration is clear,” he said.
King Salman is visiting as Saudi Arabia looks to deepen energy ties with Russia by inking deals to acquire oil and gas assets.
Sibur Holding signed an agreement on joint oil-refining projects with Saudi Arabian Oil Co., known as Saudi Aramco.
Other deals may involve Saudi participation in an Arctic LNG project led by Novatek and investment into Eurasia Drilling Co., Russia’s largest oil drilling contractor.
The head of Russia’s staterun oil giant Rosneft, Igor Sechin, said last month that there’ll be pressure for Opec and its partners to extend production cuts if Saudi Arabia proceeds with an initial public offering of a stake in Saudi Aramco. About 5 per cent of the Saudi state oil producer will be offered in an IPO next year that could value the company at more than $1 trillion, depending on the oil market.
“The Saudis will be looking for a solid commitment from President Putin to stick with the production deal with Opec,” said Chris Weafer, a partner at Macro Advisory in Moscow.
“That is Riyadh’s best hope for keeping the price of Brent in the mid $50s, if not getting it above $60 in time to support the kingdom’s ambitious valuation target for Aramco.”