MOSCOW: The Russian city of Perm, on the threshold of Siberia in the Ural Mountains, is a world away from the desert heat of Dammam in Saudi Arabia, but the two places have at least one thing in common: Electrical submersible pumps (ESP).
Novomet, the Perm-based Russian company that is the world leader in these devices, has teamed up with Saudi Aramco in a deal — also involving the Kingdom’s Public Investment Fund (PIF) and the Russian Direct Investment Fund (RDIF) — that is the latest example of business cooperation between the two countries.
A consortium of investors including RDIF, Saudi Aramco and PIF signed the deal — in the presence of King Salman and Russian President Vladimir Putin — to acquire 31 percent of Novomet.
Novomet CEO Maksim Perelman was not there due to urgent business in Perm, but he was involved in the complex negotiations leading up to the signing.
“We’ve been trying for 10 years to break into Saudi Arabia, and finally we’ve done it,” he told Arab News.
Political issues slowed down talks on the potential deal, he said, and were a factor in a proposed tie-up with the big American oil services company Halliburton, which fell foul of increasingly tense US-Russia relations.
“With Saudi Arabia it’s easier. We’re talking about business and technology, not about politics,” he said.
Under the transaction, a consortium comprising Saudi Aramco, the PIF and the RDIF will take a 30 percent stake in Novomet, a private company founded after the end of the Soviet Union by Perelman’s father and some colleagues. The value of the transaction has not been disclosed.
“We’re the technology leader in this area. The product is still unique — it’s very slimline equipment — and nobody can compete with us,” Perelman said.
Novomet pumps are installed in oil wells to drive crude oil to the surface ready for shipping and refining.
“We can solve a lot of the problems in terms of oil production,” Perelman said.
He is looking forward to closer working relationships in Saudi Arabia, and is considering opening a full branch office there.
At the moment, Novomet’s business in the Kingdom is conducted via local agents and technical support staff in Dammam, where oil was first discovered in significant quantities more than 80 years ago.
“We’ve seen a lot of improvement in how we can do business in Saudi Arabia. Now it’s much more flexible,” Perelman said.
“The Kingdom wants more companies to come and open up there, and it’s moving in the right way. Now I can get a visa easily online, whereas 10 years ago it took maybe a week.”