Posted by on July 10, 2017 6:00 am
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Categories: Asia Business China–Saudi Arabia relations Crude Crude Oil donald trump Economic history of Saudi Arabia Economy Foreign relations of Saudi Arabia G20 germany India International relations Iran Middle East Mohammad bin Salman Natural Gas North Atlantic Treaty Organization OPEC Organization of Petroleum-Exporting Countries Politics Qatar diplomatic crisis Saudi Arabia Saudi Aramco Strategic Culture Foundation Turkey Ukraine Vladimir Putin

Authored by Alex Gorka via The Strategic Culture Foundation,

Much has been said about the much vaunted trip of US President Donald Trump to Saudi Arabia where he was lavished with extravagant royal pomp. The $110 billion arms deal was signed and the plans to create an Arab NATO set the agenda. The visit – the president’s first foreign trip – was described as a major step to boost the US clout in the Middle East but the days when the region was Washington’s exclusive sphere of influence are gone.

The Kingdom has launched an ambitious Vision 2030 program to start a new chapter in its history, turning itself from a US dependent oil exporter to a regional powerhouse with diversified economy, gradually opening the doors to the whole world. Investment flows are to come from different directions with money put into different baskets. Saudi Arabia is intensifying its diplomatic efforts to change its perception to start a new era. Russia is viewed as a partner in the far-reaching plans.

The blossoming relationship between Russia and Saudi Arabia signals yet another sea change in the ever-evolving global order. King Salman is to become the first Saudi monarch to visit Russia. The trip is expected this month with talks on the way to specify the date. The visit acquires special importance as the King has taken a decision not to attend the July 7-8 summit of the G20 summit in Hamburg, Germany.

On May 30, President Putin welcomed then Deputy Crown Prince Mohammed bin Salman in the Kremlin and both men said they would deepen cooperation in oil and work on narrowing their differences over Syria. The visit came on the heels of US President Donald Trump’s historic visit to Riyadh.

Prince Mohammed bin Salman was recently appointed to the position of Crown Prince and heir to King Salman of Saudi Arabia. This appointment bodes well for the Russia-Saudi relations. The crown prince has overseen the ties with Moscow and has visited Russia many times. Russian President Vladimir Putin has called him a «very reliable partner with whom you can reach agreements, and be certain that those agreements will be honored».

Russia and Saudi Arabia might launch joint projects in petrochemical industry, in the field of renewable energy and liquefied natural gas (LNG) technologies among others. The Russia-Saudi Arabia brokered and recently extended oil output cut agreement between OPEC and non-OPEC members has become the flagship symbol of cooperation.

On June 2, Russia’s largest oil producer, Rosneft, and the Kingdom’s national oil company Aramco announced that they would look into joint investments in Saudi Arabia. The announcement was made after Rosneft head Igor Sechin and Saudi Aramco Chief Amin Nasser had held their first ever formal, scheduled meeting on May 30, going beyond brief encounters at international oil events.

The parties discussed possible ways of cooperating in Asia, including Indonesia and India, as well as in other markets. Cooperation in Asia between the world’s two biggest oil exporters would be unprecedented. Saudi Arabia via its oil giant Aramco has openly stated to be interested in global gas investment opportunities, starting in Russia’s Siberian region.

Investments have all chances to be a true ram. Saudi Arabia would particularly consider the issue of participating in the Arctic LNG projects. Russia and Saudi Arabia give indications of a possible OPEC 2.0 scenario, with Russia becoming a member. This would confront the market with a renewed and stronger oil cartel.

Russian gas giant Lukoil has revealed that it will also consider marketing oil alongside Saudi Aramco. Another Russian oil company, Tatneft, has announced it is open for cooperation with Saudi Arabia.

Saudi Arabia has confirmed it would evaluate the possibility of joining Russia’s arctic liquid natural gas (LNG) project. Saudi Aramco has always been heavily involved in the gas sector, as it is already a very large gas producer. It is pursuing shale gas in the future, with first production expected around 2020-2021.There are prospects for OPEC – non-OPEC cooperation going beyond crude oil to integrate the Gas Exporting Countries Forum (GECF). A new cartel would be powerful enough to stabilize the energy market and protect it from negative developments.

The parties do not agree on Syria and some other issues but the differences in political contacts are limited and do not affect the neutrality of Riyadh with respect to Crimea, the events in Ukraine and sanctions against Russia, which Saudi Arabia has never joined.

According to Dmitry Shugaev, the head of Federal service on military-technical cooperation (FSMTC), arms deals are being discussed. Russia’s Rostec state corporation has been in talks with Saudi Arabia and on the T-90S third-generation main battle tanks deal. Riyadh wants to purchase Russia MiG-35 lightweight fighters. S-400 cutting edge air defense systems are also on the table.

No doubt, the Qatar crisis will be part of the agenda. Russia has not taken sides in the current dispute between Qatar and other Arab states and it has a recent history of cooperation with all sides of this conflict. As a result, Russia is well suited to act as a mediator and a communications channel between Riyadh and those who support Doha – such influential actors as Iran and Turkey.

Evidently, Saudi Arabia wants to introduce adjustments to its policy of one-sided focus on the United States. Russia has improved its strategic stance in the region significantly in recent years. The King’s visit will be a “turning point” in relations between the two countries. Riyadh’s desire to boost the relations with Moscow can be seen as a shift to affect the political dynamics of the Middle East and even global politics.

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