It was below minus 30C in the Arctic Circle but the delegations from Saudi Arabia and Russia tossed aside their gloves for a friendly handshake, smiling despite the cold under their fur hats and padded jackets.
Khalid al-Falih, Saudi energy minister, had come to the port in Sabetta in Russia’s far north to open a $27bn liquefied natural gas plant, in the company of his counterpart Alexander Novak and President Vladimir Putin.
“Buy our gas and you’ll save oil,” the Russian leader tells Mr Falih. “That’s why I‘m here,” Mr Falih replied, patting Mr Putin on the shoulder. “I have a great relationship with Alexander, we’ve become partners,” the Saudi minister adds.
The exchange in December highlights how Russia and Saudi Arabia have over the past 18 months forged an unlikely alliance in energy, despite being on opposing sides on other issues such as the Syrian conflict.
The traditional rivals, which combined produce a fifth of the world’s crude, now speak with a united voice on energy-related matters and frame their relationship in strategic terms.
The trigger for a rapprochement that seemed unthinkable a few years ago was a common enemy: US shale oil. The collapse in oil prices from 2014, as hydraulic fracturing unlocked a flood of US crude that caught other producers off guard, set their collaboration in motion.
The partnership is propelled by Mr Putin and Mohammed bin Salman, Saudi Arabia’s powerful crown prince. But it is up to Mr Falih and Mr Novak to execute the strategy and convince the world of its strength.
Speaking to the Financial Times, Mr Falih says the alliance “has the potential to become one of our strongest energy partnerships around the world”.
Saudi Arabia and Russia-led efforts to curb crude production, shrink oil stockpiles and boost prices have over the past year grown into deeper engagement, including proposals for corporate joint ventures, investments and military deals.
“The strength of the economic and energy partnership will help bring trust and confidence,” Mr Falih says. “We invest in Russia . . . and they’re interested in investing in the kingdom.”
Saudi Arabia’s new sovereign wealth fund has earmarked $10bn for investment in Russia, with $1bn already disbursed. Moscow-based funds are looking at Saudi, the two nations have set up a joint $1bn tech fund and outlined areas of collaboration such as in research and development.
Read full article by Anjli Raval, Roula Khalaf and Henry Foy on Financial Times, February 7, 2018.
