As leaders head to ‘Russian Davos,’ KSA looks for oil stability
Thousands of business leaders and financiers have descended on St. Petersburg for Russia’s annual International Economic Forum — sometimes dubbed the “Russian Davos” — amid heightened worries over global trade, financial market volatility and geopolitical tensions.
The forum, held under the patronage of Russian President Vladimir Putin, who regularly attends, aims to offer solutions to the increasingly serious worries affecting the global economy. Its aim is to facilitate dialogue between east and west, and to highlight Russia’s role in the global economic infrastructure.
The Middle East — similarly on the pivot between east and west — will be well represented, despite the fact it coincides with the Eid Al-Fitr holiday. Top level representatives from Saudi Arabia and other Middle East countries will be in attendance, and the global energy industry will be very much on the agenda.
The Organization of the Oil Exporting Countries, led by the Kingdom as its biggest producer, has joined with Russia and other non-OPEC crude producers for the past two years in an alliance to limit oil production, and avoid the volatile price swings of 2014-16, when crude prices crashed below $30.
The alliance has brought a measure of stability to the global energy business, nearing the OPEC aim of balancing supply and demand of global energy supply.
Khalid Al-Falih, the Saudi energy minister who is leading the Saudi delegation, told Arab News earlier this week that the 24 countries in the alliance, known as OPEC+, remained committed to this aim to the “benefit of producers and consumers everywhere.”
The Organization of the Oil Exporting Countries, led by the Kingdom as its biggest producer, has joined with Russia and other non-OPEC crude producers for the past two years in an alliance to limit oil production.
There have been suggestions in the oil industry that Russia was looking to increase oil production, and was no longer as committed to the targets as before. These and other issues will likely be the subject of talks on the sidelines of the forum between Al-Falih and his Russian opposite number Alexander Novak.
Al-Falih insisted that Saudi Arabia would do “what is needed” to sustain market stability, which he called a “cornerstone of this important oil relationship.”
Other big OPEC members are also expected at the forum, including representatives from two of the current “problem producers,” Iran and Libya. Other leaders of the global oil business, including the US, will also attend, despite a decision by the US ambassador in Russia to stay away because of increasing tensions between the two countries, especially over the recent arrest of American investor Michael Calvey. Russian authorities had hoped Calvey could be released in time for the event.
Such developments are unlikely to upset the increasingly close relationship between Saudi Arabia and Russia. At last year’s Future Investment Initiative in Riyadh, the Kingdom joined the Russian-Chinese investment fund put together by the Russian Direct Investment Fund (RDIF), and it is likely St. Petersburg will see some consummation of the deals heralded by that announcement, as well as transactions in the oil infrastructure sector by oil producer Saudi Aramco.
Al-Falih highlighted collaboration between the Kingdom and RDIF in petrochemicals, energy research and agricultural trade. That cooperation is two-way, with Russian companies believed to be looking at the construction of a $1 billion rubber joint venture in Saudi Arabia, and Aramco teaming up with SABIC — in which it is negotiating to buy a controlling stake — in gas and petrochemicals in Russia.
Kirill Dmitriev, chief executive officer of RDIF, recently said that he was nearing conclusion of a deal with Aramco to take a stake in Novomet, a Russian oil production equipment manufacturer, as well as nine projects with Saudi Arabia’s Public Investment Fund (PIF) in oil servicing and refining as well as energy logistics.
The Russian-Saudi collaboration goes beyond business. On the first day of the forum the State Hermitage museum in St. Petersburg will unveil a display by two Saudi female artists — Lulwah Al-Homoud and Daniah Al-Saleh — on the theme of “artificial intelligence and intercultural dialogue.”
- Frank Kane is an award-winning business journalist based in Dubai. Twitter: @ frankkanedubai