Russian fund chief pledges to continue Saudi partnerships

Arab News, 11.03.2020

• Kirill Dmitriev: Despite disagreements we have on some energy-related issues, we continue to work actively with Saudi Arabia

• Dmitriev: We are investing together with Saudi Arabia into various projects and are cooperating closely in other areas

LONDON: The chief of the Russian Direct Investment Fund has pledged to continue developing partnerships with Saudi Arabia despite energy sector tensions between the pair.

Kirill Dmitriev made his remarks as Saudi Arabia prepared to increase production to record levels.

“Despite disagreements we have on some energy-related issues, we continue to work actively with Saudi Arabia,” he said. “We are investing together with Saudi Arabia into various projects and are cooperating closely in other areas. Of course, many people are trying to drive a wedge between Russia and Saudi Arabia, but we see a constructive approach on both sides. There are differences on some energy issues but Russia has developed a partnership with Saudi Arabia and this partnership will continue.”

Prince Abdul Aziz bin Salman, the Saudi energy minister, on Wednesday told Saudi Aramco to prepare to increase its maximum sustainable capacity — the limit to the crude it can produce over the long term — to 13 million barrels per day.

That would enable the Kingdom to leapfrog the US as the number one crude producer, pushing Russia into third place. Analysts said the new capacity would come from expansion and enhancement of production from existing fields.

A statement from Aramco to the Tadawul stock exchange, where its shares are quoted, said: “Saudi Aramco announces that it received a directive from the Ministry of Energy to increase its maximum sustainable capacity from 12 million barrels per day to 13 million,” in accordance with a 2017 royal decree.

In another sign of Saudi preparations for an oil export surge, the National Shipping Company, Bahri, was reported to be considering the hire of at last eight extra supertankers to export crude from the Kingdom.

The moves by the Saudi authorities represent a further escalation in the “price war” that broke out after Vienna, as another big Middle East producer, the UAE, also said it would dramatically increase production.

In Russia, whose unwillingness to participate in a further round of output cuts sparked the price war, energy minister Alexander Novak has called a meeting of the country’s top oil companies tomorrow to discuss the turmoil on global markets.

He said that the decision by Saudi Arabia to raise output and cut prices was “probably not the best option,” but that he remained in telephone contact with OPEC ministers and would take part in an OPEC+ technical committee later this month.