RIYADH, 2 June 2005 — Saudi Arabia and Russia will set up joint ventures in third countries as part of their comprehensive cooperation program both within the Kingdom and abroad.
According to Russian Ambassador Dr. Andrei Baklanov, the Saudi-Russian Joint Commission meeting, which concluded in Riyadh earlier this week, was noteworthy in several aspects. It charted the course of bilateral cooperation in several fields, including space technology, higher education and manufacture of special alloys in space, besides exploration of water resources and environmental preservation by launching more Saudi satellites through Russian rockets.
Referring to bilateral cooperation in third countries, Ambassador Baklanov said the decision was taken in light of the economic boom which both countries are going through. While the Kingdom has huge resources accruing from its oil revenues, Russia’s revenues also surged to a record $146 billion this year. This factor was behind their decision to channel investments into third countries.
Reliable sources told Arab News that one of the countries being considered for such joint investment is India, which has strong relations with both the Kingdom and Russia. India’s Oil and Natural Gas Commission (ONGC) began discussions with Saudi Aramco and Lukoil for a possible partnership in Mangalore Refinery & Petrochemicals Ltd. (MRPL). The foreign partner, in this case the Saudi-Russian joint venture, will be brought in when MRPL goes for doubling its capacity from 15 metric tons per annum to 30 mtpa. At present MRPL’s rated capacity is only 9.69 mtpa. The refinery produces nearly 12 mtpa at 120 percent capacity utilization. Further de-bottlenecking is expected to increase its production to 15 mtpa.
Another aspect of the bilateral cooperation, according to Baklanov, is to study the nature of the oil market and collect data that would enable them to predict the behavior of the oil market so as to harmonize the interests of oil importing and exporting countries.
In the Kingdom, Lukoil and Saudi Aramco have set up a joint venture, Luksar, which had a $215 million letter of credit opened by the Saudi Holland Bank (ABN Amro group) to enable Lukoil to finance in full its five-year geological prospecting program under the Luksar project.
The area of land that it was allocated for oil prospecting is called Block A, an area of 29,900 square meters located in the northern part of the Rub Al-Khali desert. The probability of hydrocarbon discovery for commercial use is said to be over 80 percent.
The joint venture also signed a contract for the prospecting and development of Block A gas and gas condensate deposits, which is the project’s fundamental document.