Along with participating in the OPEC supply cut pact, Russian Energy Minister Alexander Novak says Russia and Saudi Arabia are also working together on energy projects, including oil services and petrochemicals. Lukoil photo.
Russia looking to build on relationship with OPEC even after supply cut agreement expires
In a report by S&P Global Platts, Russian Minister of Energy, Alexander Novak, says he is looking to build a long-term relationship with Saudi Arabia and more broadly with OPEC after the current cartel supply cut deal expires.
On Tuesday, Novak told RIA news agency that Russian oil companies and the state budget have so far gained about $43 billion due to the OPEC supply cut agreement.
As part of the OPEC agreement, Russia is reducing its output by 300,000 barrels per day (b/d). Overall, participants in the deal have agreed to cut production by 1.8 million b/d in total in an effort to bring the global oil market back to balance.
According to the report, coalition members are talking about future cooperation after the agreement winds down and Russia and Saudi Arabia are already working together in some projects.
In 2017, the two oil giants established a $1 billion fund to invest in joint energy projects, including oil services and petrochemicals. Russia and Saudi Arabia are also talking about gas projects, following the launch of Russia’s Yamal LNG project.
Novak says he is not concerned about the strength of the relationship between the two countries even after the OPEC pact expires and Russia and Saudi Arabia compete for market share again.
“We understand that global demand for oil will continue to grow rapidly and this demand will need to be met, so we will likely need to work together, including on upstream technology and joint projects to meet this growing demand,” Novak told S&P Global Platts.
Novak and Saudi Arabia’s Minister of Energy, Industry and Mineral Resources, Khalid al-Falih, will meet while at an energy symposium for the International Energy Forum this week. According to S&P Global Platts, this is the third meeting between the two this year.
“Taking into account the current political and economic relationship and projects that we’re considering, I think our relationship will be of long-term nature,” he said.
In late January, Falih said he believes his country’s association with Russia will continue for “decades and generations”.
Novak says future cooperation could include joint studies, the exchange of information and some investment projects.
“Everybody liked [the format] when key producing countries that account for some 60 per cent of the world production meet to discuss various topics that are important and of interest for them, including on the future of the energy markets,” Novak said. “Where else can you meet 24 energy ministers from various countries, including for bilateral discussions, at the same time?” he said.