Saudi Arabia and Russia signed a deal on Monday to increase cooperation between OPEC+, taking what was a loose alliance between OPEC and several non-OPEC members, including Russia, and making it more official, RT reported on Monday.
Other agreements forged during Putin’s visit to Saudi Arabia on energy were also signed, S&P Global Platts reported.
One of the deals is between the Russian Direct Investment Fund, Saudi Aramco, and Saudi Arabia’s sovereign wealth fund to acquire a near-31% stake in Russia’s Novomet, which holds a 3.9% share in the global oilfield equipment market and produces oil-submersible equipment. That deal should close some time in 2020 and represents the first investment between RDIF, Aramco, and the Saudi wealth fund.
Other agreements were signed for a methanol plant in Amur and oil products transporter NefteTransService, Platts said.
Overall, 20 agreements were signed between the two nations across a variety of industry sectors.
Russia’s participation in the OPEC agreement is essential if the cartel has any hope of stabilizing the oil market, but it has until now been hesitant to formalize its relationship with the group, who count on Russia’s large oil reserves and spare capacity, like Saudi Arabia, to help swing the oil market back into balance.
The OPEC+ compliance rate to the production quotas for September was more than 200%.
Russia has not always complied with its assigned production quota, but September’s production slipped to 11.25 million bpd, compared to 11.29 million bpd in August. Russia’s September production was, however, still above its production quota. Russia now holds oil reserves worth $1.2 trillion - nearly double the value as of 2018 as more oil was discovered and as the existing reserves were valued higher.
Specific details of the long-term agreement between Russia and OPEC have not yet been made available.
By Julianne Geiger for Oilprice.com
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.