Abu Dhabi, UAEThursday 21 November 2019

Saudi Aramco signs nine agreements with Russian firms during Putin visit

Four Russian companies were granted licences to operate in Riyadh by Saudi General Investment Authority

Saudi Aramco signed nine preliminary agreements with Russian companies as part of a broad range of bilateral pacts in energy and industry forged during president Vladimir Putin’s first visit to Riyadh in more than a decade.

The Saudi state producer signed agreements with Shelbayb, Galin, PAO TMK, Intratool, Ingra Service, Integra Service, Technovic, Gazprom Oil and NKT as part of 17 agreements signed by state-backed entities with Russian companies.

An agreement was also announced between Aramco and the kingdom’s Public Investment Fund to purchase a 30.76 per cent share in Novomet, a Russian manufacturer of high-tech pumps, from Russia’s state-owned private equity company Rusnano.

Saudi Arabian General Investment Authority also granted four Russian companies licences to operate in the kingdom. Russian real estate company Kontakt, computer programming consultancy P Group Saudi, financial advisory company RS Investment Advisor and architectural and engineering firm Geopulsar were awarded licences. The agreements were signed at the Saudi-Russian CEO forum attended by more than 400 business leaders in Riyadh and follows the establishment last week of the sovereign Russian Direct Investment Fund’s (RDIF) first overseas office in the Saudi capital.

“We believe that today’s event serves as a powerful platform to continue building this valuable relationship between our two countries,” said Saudi Arabia’s Minister of Commerce and Investment, Majid Al Qasabi.

“Co-operation and dialogue between our nations will definitely pick up momentum as a result of the forum and RDIF as a co-organiser is committed to strengthening these ties,” said the chief executive of RDIF, Kirill Dimitriev.

Around 14 agreements worth more than $3 billion (Dh11bn) with Saudi companies in sectors including space, logistics and AI were expected to be signed during the visit, Mr Dimitriev told Al Arabiya TV on Sunday.

Mr Putin arrived in Saudi Arabia amid strengthening of ties between the world's two largest sovereign producers of crude. Ahead of his visit, Mr Putin told Al Arabiya that RDIF and Saudi Arabia's Public Investment Fund have invested $2bn from a $10bn platform to explore joint investments.

Work is underway on other schemes with possible projects likely to be finalised in Saudi Arabia's downstream sector. Russian firm Sibur Holding was considering $1bn investments in the Saudi petrochemicals sector, Mr Putin told the TV channel.

The two sides are also looking at "fostering partnerships" in military and defence.

'We have been negotiating for a long time," Mr Putin said.

The nine deals signed by Saudi Aramco with Russian companies include an agreement with Gazpron Neft to exchange technical knowledge and identify 'mutual technical studies of interest to both companies', according to a statement issued by Aramco.

A deal with Russia's Chelpipe will lead to localised production of ball valves in Saudi Arabia and a deal with Galen will localise production of fibreglass rebar. An agreement between Aramco and Integra will see a new manufacturing facility being created for downhole drilling motors and drilling tools, while an agreement with Angara Service will see it provide speciality chemicals and cleaning services to some of Aramco's oil refineries.

"Today‘s agreement is expected to enable future investments in both Saudi Arabia and Russia that come under the framework of the Saudi-Russian Energy Co-investment Platform through Saudi Aramco, PIF and RDIF, targeting to promote investments in the energy sector in both Saudi Arabia and Russia," said Saudi Aramco's president and chief executive, Amin Nasser. "We look forward to expanding our mutual interests in the energy sector through this important co-investment platform with Russian companies.“

Updated: October 15, 2019 08:45 AM

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