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Russia and Saudi Arabia have been called unlikely allies, thrown together by the lower-for-longer oil price scenario that has been unfolding over the last three years, and now these unlikely allies are forging deeper ties.
The Kingdom is looking to acquire stakes in at least two oil and gas companies in Russia, Saudi sources close to the talks told Bloomberg, requesting anonymity because of the private nature of said talks. One target is Russia’s biggest drilling contractor, Eurasia Drilling, and the other is natural gas independent Novatek, or rather its second Arctic LNG project.
Novatek is currently building its first Arctic LNG export terminal, which is scheduled to start operating next month. A second one is slated to begin operations in 2022 or 2023, with Novatek eyeing the top spot among LNG producers in Russia. The final investment decision on Arctic LNG 2 will be made in 2019.
Saudi Arabia’s King Salman is due to arrive in Moscow tomorrow and his delegation will include representatives of Aramco, as well as Energy Minister Khalid a-Falih, who will attend an investment forum. Aramco said in a statement earlier this week that it expects to sign a number of preliminary business agreements with Russian businesses in oil and gas, petrochemicals, renewable energy, and advanced materials and technologies.
In petrochemicals, Aramco is planning a synthetic rubber tie-up with Russia’s Sibur Holding, the country’s largest petrochemicals maker, according to earlier reports.
King Salman and Vladimir Putin are also likely to discuss the progress of the OPEC/non-OPEC oil production cut deal and a possible extension that is looking increasingly likely. Earlier today, Russia’s Foreign Minister Sergey Lavrov told a pan-Arab daily, Asharq al-Awsat that Moscow is committed to working with Riyadh to continue the implementation of the deal, Reuters reported.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.