Russia state fund chief sees alliance with OPEC lasting years

Reuters, 19.01.2017

A senior Russian official, who last year was first to predict that Moscow could cut oil output in tandem with OPEC, believes such cooperation can now last for years, strengthened by cross border investments between Saudi Arabia and Russia.

Last year Kirill Dmitriev, who runs Russia's $10 billion state Direct Investment Fund and has close ties to the government and the Kremlin, spoke about a possible joint action after meeting Saudi officials at the World Economic Forum in Davos.

Russia agreed to cut output together with OPEC last month and Dmitriev, a former investment banker from Goldman Sachs, now says it is only the beginning of a long-term alliance between the world's two biggest oil exporters.

"This is the trend of the future. For a long period of time it was not possible because of political obstacles. But today this trend is strengthening including because of Russia's active role in the Middle East," Dmitriev told Reuters.

Russia is effectively fighting a proxy war with some key OPEC members such as Saudi Arabia, the United Arab Emirates and Qatar in Syria after Moscow sent its planes and troops to help President Bashar al Assad win a multi-year conflict.

But despite huge political tensions with some key OPEC members, Russia was able to find a compromise with the Organisation over cuts. Also in December, key Saudi ally Qatar agreed to invest 2.5 billion euros ($2.7 billion) in buying shares in Russian state oil major Rosneft.

"We are building a factory of trust when we do one, two, three deals which will lead to big, important energy alliances. To a big extent what we are seeing today is OPEC 2.0 because it is not OPEC alone anymore but OPEC plus Russia," said Dmitriev.

"An alliance of such energy players as Saudi Arabia and Russia signals great investment potential for the future".