Russia’s energy minister says cooperation with Saudi Arabia ‘can bring tangible benefits for both sides’

Russian Minister of Energy Alexander Novak believes Saudi-Russian relations are built on more than just oil.
Updated 14 October 2019

Russia’s energy minister says cooperation with Saudi Arabia ‘can bring tangible benefits for both sides’

  • Russia’s energy minister sees working with Kingdom on oil and gas as the first step toward a ‘new alliance’

MOSCOW: Alexander Novak, Russia’s energy minister since 2012, has overseen the country’s oil and gas industry at a time of great geopolitical and economic change. On the occasion of the visit of President Vladimir Putin to Saudi Arabia, Novak tells Arab News why the Saudi-Russia relationship is about more than just oil — and how the “black swans” will continue to affect the global oil price.

Q: Russia and Saudi Arabia have become much closer in all spheres of activity in recent years. Why is this?

Novak: The expansion of interaction with our Saudi partners along the entire chain of cooperation for us, in essence, is the creation of a new alliance in order to maintain our competitiveness in world markets and to develop the national and world energy in general.

This, in my opinion, is a completely legitimate response towards the current challenges of globalization, which are dictated by the prevailing geopolitical terrain.

Of course, Russian-Saudi cooperation in the past has gone far beyond the frame of energy cooperation intended to stabilize the oil market.

We have taken a pathway towards a consistent increase in the pace of Russian-Saudi trade and economic partnership.

We are engaged in an active dialogue in all sectors of trade and economic cooperation, including agriculture, industry, investment and energy sectors.

As you may know, on June 10 the 6th meeting of the Russian-Saudi Intergovernmental Commission was held in Moscow, as a result of which we noted a significant increase in our cooperation and outlined its new directions and priorities.

From January to June 2019, Russian-Saudi trade turnover increased 28 percent compared to the same period in 2018, reaching $637.7 million.

Q: In energy, what are the common areas of interest?

Novak: Investment cooperation is one of the key growth points for our economic relations. About $2 billion worth of investments have already been made in joint projects in Russia. In this case, we see energy as one of the most promising areas of collaboration.

We have many points of intersection; a number of Russian companies wish to work with Saudi counterparts on the supply and maintenance of oil and gas equipment.

We are conducting preparatory work to develop new breakthrough technologies that will allow us to adapt oil to the current climate and environmental agenda.

In addition, bilateral and international cooperation is important to stabilizing the oil market under the OPEC+ Agreement.

Thanks to our regular meetings, policy coordination between OPEC members and other parties of the Vienna deal is proving successful.

It is important that the practice of such confidential contacts gives appropriate signals to all participants in the oil market, who must be convinced that our commitment to maintaining balance remains unwavering, and we continue to keep abreast of, and monitor, fluctuations in the oil market, preventing its imbalance.

The development of cooperation in the field of raw energy is a good basis for cooperation in other areas.

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Q: Saudi Arabia and Russia have been the leaders of the Opec + alliance that seeks to regulate oil output. Are their interests identical in this project?

Novak: Any union is built on mutual understanding and mutual trust. The OPEC + format is not an exception.

The results achieved are key to the long and painstaking work of its participants, including the cohesion of interests and the search for compromises.

Judge for yourself: At the last OPEC/non-OPEC ministerial meeting, we managed not only to extend the agreements in the framework of the Declaration on Cooperation, but also to switch to a new format of cooperation by signing the Charter for Cooperation of Oil-producing Countries.

This document will serve not only to improve understanding and trust among OPEC and non-OPEC countries. It will also become a basis for joint work on the development of new technologies to adapt oil to the modern climate and environmental agenda, requirements for ensuring global energy security and the implementation of the UN Sustainable Development Goals.

Q: What do you think is a fair price for oil in the global market these days?

Novak: Despite isolated cases of force majeure in the oil market this year, the situation is stable and is under the control of the countries participating in the market.

At the same time, we understand that due to the ongoing pressure on the market of “black swans,” such as trade wars, commodity prices may change in one direction or another.

Q: Not so long ago, Saudi Arabia’s oil facilities were brutally attacked. How do you think this affected the country’s oil sector? What needs to be done in order to stop such attacks in the future?

Novak: Situations such as an attack on facilities in Saudi Arabia lead us to the need to constantly conduct safety assessments at fuel and energy facilities around the world, especially in the Middle East.

Such attacks on large oil suppliers pose risks to global energy security.

What happened clearly showed how quickly the situation on the market can change; at that moment, 5-6 percent of world production left the market and prices jumped by 20 per cent, which is a record increase for at least 30 years.

At the same time, the market recovered in just a week.

I believe, provided that high security at the fuel and energy complex is ensured, and our actions are taken to stabilize the market situation within OPEC +, we will be able to further control the situation and quickly bring it back to normal.

Q: Do you see the basis for the development of gas cooperation between Saudi Arabia and Russia? What can the two countries learn from one another?

Novak: The interest in cooperation with Saudi companies is shown by many Russian oil and gas companies, such as Gazprom and Sibur.

We believe that when finding mutually interesting projects, our cooperation can develop along the entire value chain and can bring very tangible benefits for both sides.

For example, the energy strategy of Russia provides for a several-fold increase in the production of liquefied natural gas — as part of this strategy, our companies are implementing a number of projects that have great prospects in terms of the participation of foreign investors.

In addition, we strive for scientific cooperation — currently the possibility of creating a joint Russian-Saudi institute in the field of energy cooperation is being explored.

Q: What agreements can be expected from Vladimir Putin’s visit to the Kingdom?

Novak: As part of the work of the Joint Intergovernmental Russian-Saudi Commission on Trade, Economic, Scientific and Technical Cooperation, we have prepared a solid list of documents including in the energy field, agriculture, trade and other areas. In total, there are more than 30 documents. A high-level Russian-Saudi strategic cooperation program has been prepared based on the national development priorities of our states.

At the corporate level, I think our countries have already done a lot of work. At the moment within the framework of cooperation between the Russian Direct Investment Fund and the Kingdom of Saudi Arabia Public Investment Fund, investments have already been made in more than 30 projects from various sectors of the Russian economy, including energy, infrastructure, and technology worth over $2.5 billion.

Within the framework of the visit, we expect the signing of a number of agreements and memorandums for an additional $ 1 billion, a significant part of them is in the energy sector. I hope that the new agreements will become the basis for the subsequent strengthening of bilateral cooperation. In the course of painstaking work with the Saudi side, we managed to lay a solid foundation for further progressive development of relations. I am sure that with our partner, the Minister of Energy of the Kingdom of Saudi Arabia; Prince Abdulaziz bin Salman, we will make every effort to further develop Russian-Saudi cooperation.

 


Saudi Arabia loses 120,000 hectares of trees every year

Awareness campaigns highlight the importance of trees. (Shutterstock)
Updated 21 February 2020

Saudi Arabia loses 120,000 hectares of trees every year

  • The fine for cutting down a tree can reach SR5,000 ($1,333) while the fine for transporting logs is SR10,000

MAKKAH: Saudi Arabia loses 120,000 hectares of trees every year through destruction and tree logging.
Trees help stop desertification because they are a stabilizer of soil. In the Arabian Peninsula, land threatened by desertification ranges from 70 to 90 percent. A national afforestation campaign was launched in Saudi Arabia last October, and there is a national plan set to run until this April.
The Ministry of Environment, Water and Agriculture said that although natural vegetation across the country had suffered in the past four decades, modern technologies such as satellites and drones could be used to track down individuals or businesses harming the Kingdom’s vegetation.
“Harsh penalties should be imposed on violators such as the seizure or confiscation of transport and hefty fines,” Dr. Abdulrahman Al-Sugair, chairman of the Environmental Green Horizons Society, told Arab News.
These were long-term solutions and they needed coordination with authorities to ensure warehouses and markets did not stock logs or firewood, he said. Another solution was sourcing an alternative product from overseas that was of high quality and at a reasonable price. A third was to provide support to firewood and coal suppliers.
“The general public needs to be more aware of the importance of trees and should have a strong sense of responsibility toward these trees,” Al-Sugair added.
“They should also stop buying firewood in the market. We can also encourage investment in wood production through agricultural holdings as well as implement huge afforestation projects and irrigate them from treated sewage water.”
The fine for cutting down a tree can reach SR5,000 ($1,333) while the fine for transporting logs is SR10,000. These fines could not be implemented as they should be because there were no available staff to monitor and catch violators and, to make matters worse said Al-Sugair, there was a weak level of coordination between authorities.
Most of the Kingdom’s regions have suffered in some way from tree felling, and some places no longer have trees. These violations are rampant in the south and Madinah regions, as well as in Hail and Al-Nafud Desert.
Riyadh is the most active and the largest market for firewood. Many people in Al-Qassim use firewood as do restaurants in some parts of Saudi Arabia.
Omar Al-Nefaee, a microbiology professor at the Ministry of Education in Taif, said the reason behind the widescale destruction of the environment could be attributed to a supply shortage of imported firewood.
“Tree logging causes an environmental disequilibrium,” he told Arab News. “The Ministry of Environment, Agriculture and Water has launched an initiative raising public awareness on the issue and is asking people not to use local firewood. Several awareness campaigns have been launched for the same purpose to educate people about the importance of using imported wood instead of the local wood in order to protect the Kingdom’s vegetation.”
Official reports warn that the Kingdom has lost 80 percent of its vegetation and that the drop will have a detrimental effect on its biodiversity, as well as causing great damage to the environment.
The general public should use other heating options during the winter and stop using firewood, Al-Nefaee said.
Some local studies have called for farms that can produce wood from plants that do not consume too much water and do not affect vegetation, while at the same time reducing the pressure on other regions in the Kingdom that are rich in animal resources.
Falih Aljuhani, who runs a business that imports wood from Georgia, encouraged Saudi firms to import wood from the Balkans because it was a competitive market and the trees had low carbon percentages.