Saudi Arabia and Russia studying new ‘working system’ for oil

There are suggestions that Russia, along with other countries, could join a restructured OPEC in the future, given weight by comments made by Crown Prince Mohammed bin Salman. (AFP)
Updated 12 June 2019

Saudi Arabia and Russia studying new ‘working system’ for oil

  • Headed by Khalid Al-Falih and Alexander Novak, the meetings were the sixth occasion the Saudi-Russian intergovernmental committee has convened
  • The meetings come with both countries recognizing the need for closer cooperation given the volatile outlook for the global economy, trade and energy markets

DUBAI: High-level talks between policymakers from Saudi Arabia and Russia last weekend in Moscow are likely to herald cooperation across a range of economic, commercial and cultural areas — possibly including a permanent mechanism to coordinate on oil supplies.
Headed by Saudi Energy Minister Khalid Al-Falih and his Russian opposite number Alexander Novak, the meetings were the sixth occasion the Saudi-Russian intergovernmental committee on economic, trade, scientific and technical cooperation has convened.
Al-Falih said there is “no doubt that the current situation at the global level, characterized once more by fluctuations, renders Saudi-Russian cooperation even more important. For this reason, we thoroughly look into setting a permanent working system among major oil producers, for future cooperation” in the global markets.
The talks involved around 50 technocrats and advisers on the Saudi side, with a similar number of Russians.
The meetings come with both countries recognizing the need for closer cooperation given the volatile outlook for the global economy, trade and energy markets.
At the end of the talks, Al-Falih said: “These meetings were held at a time when we have had more reasons to develop cooperation and integration, to achieve the goals set by both our countries.”
They followed talks in St. Petersburg between a top-level Saudi delegation and Vladimir Putin, the Russian president, who will visit the Kingdom in October.
“We, in the Saudi-Russian joint committee, completely agree that both the Russian ‘national projects,’ and the Kingdom’s Vision 2030 present new incentives, a big boost, and wider horizons to our efforts, due to the big similarities and possibilities of integration between the plans of the two countries,” Al-Falih said.
The topics discussed in Moscow covered investments in energy, petrochemicals, military industries, logistics and telecommunications, but also spanned “softer” areas like education and training as well as tourism and culture.

 

Some analysts took Al-Falih’s reference to a “new working system” as a suggestion that Russia and other oil-producing countries could become partners in a revamped version of the Organization of the Petroleum Exporting Countries (OPEC), which has helped regulate oil flows since 1960.
Robin Mills, CEO of consultancy Qamar Energy, said: “The Russians might want it for geopolitical reasons, the Saudis might want it for oil market management.”
David Hodson, managing director of energy finance firm BluePearl Management, said: “OPEC in its current form faces big challenges. A streamlined form would make the oil market easier to manage.”
There has been speculation before that Russia and others could join a restructured OPEC, and in 2018 Crown Prince Mohammed bin Salman said the Kingdom and Moscow were working on a “10 or 20-year agreement” on oil supply.
Currently 14 OPEC members are joined by 10 non-OPEC exporters in a deal to limit supply, which could be extended at a forthcoming meeting in Vienna, though both sides are still working on the details.
Apart from the oil market cooperation between Saudi Arabia and Russia, Al-Falih pointed to recent measures in the Kingdom over capital and investment flows from Russia, to improve entry procedures for businesspeople and move to electronic visas.
“(We) would like that the Russian side offers similar facilities to Saudi citizens, whether businessmen or investors, especially for those who are currently facing difficulties in getting Russian visas, due to long waiting periods, high tariffs, and inadequate visa time validity,” he added.
He also highlighted recent moves toward greater cooperation in renewable energy. There are also deals in the supply of agricultural produce, with Saudi Arabia set to become a major importer of Russian grain.
In tourism, Al-Falih said Saudi Arabia was keen to include Russia on the list of countries that can apply for the Kingdom’s new tourist visa, and would also like to encourage more Hajj and Umrah visitors from Russia.
In culture, Saudi Arabia has been chosen as guest of honor at the 2021 St. Petersburg Cultural Forum, having sponsored a prestigious art exhibition in the city last week.

FASTFACTS

There has been speculation before that Russia and others could join a restructured OPEC, and in 2018 the Saudi Crown Prince Mohammed bin Salman said the Kingdom and Moscow were working on a “10 or 20-year agreement” on oil supply.


Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

Updated 14 October 2019

Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

TOKYO: Under-pressure start-up WeWork is considering two huge bailout plans including a cash injection that could see Japanese investment titan SoftBank take control of the firm, according to reports.
The office-sharing giant had been on course for a massive initial public offering until last month when questions began to be asked over its governance and profit outlook.
The firm’s valuation plunged from $47 billion in January to less than $20 billion in September and the listing plans have been dropped, while co-founder Adam Neumann stepped down as chief executive.
With New York-based parent company We Co. not expected to push for the IPO this year, the cash-strapped firm is looking for a financial lifeline.
The Wall Street Journal, New York Times and Bloomberg News cited unnamed sources close to the talks as saying SoftBank — the US firm’s biggest shareholder — had drawn up a proposal that gives it full control of WeWork.
The move would dilute the voting power of Neumann, who remains as chairman of the company he started in 2010 and also currently maintains control a majority of voting shares.
They also reported that WeWork is looking at a deal with Wall Street giant JP Morgan to raise $5 billion in debt, with the Times saying directors of We would be meeting as soon as Monday afternoon to discuss that.
“WeWork has retained a major Wall Street financial institution to arrange financing,” the Journal reported a company spokesman as saying.
“Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”
The New York-based startup that launched in 2010 has touted itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.
However, the company, which lost $1.9 billion last year, has faced skepticism over its ability to make money, especially if the global economy slows significantly.