Russia, Saudi Arabia to ink LNG deal Wed, finalize 3 joint energy projects soon: Russian official

Riyadh (Platts)--14 Feb 2018 428 am EST/928 GMT

Russia and Saudi Arabia plan to ink an agreement in the LNG sector during Wednesday talks in Riyadh, and also aim to finalize three major energy projects worth more than $2 billion in joint investments within the next three months, as the two countries aim to accelerate work to build a strong bilateral relationship, the head of Russia's Fund of Direct Investments, Kirill Dmitriyev, said Wednesday.

Saudi Aramco is expected to "partner with a major LNG project in Russia," Dmitriyev said, speaking during an energy forum in Riyadh.

"I think today you will also see a big announcement between Saudi Aramco and a major LNG project in Russia, but let's wait for the announcement," he said, adding that Russia enjoyed seeing Saudi Arabia's energy minister Khalid al-Falih visiting the Arctic Yamal LNG project launched in late 2017. Falih twice visited the Novatek-led Yamal LNG project last year as Saudi Arabia is interested in LNG purchases to free more oil that it currently uses as feedstock for its power stations. The Yamal LNG's initial capacity of 5.5 million mt of LNG is set to grow to 16.5 million mt/year when all three trains are launched and operational, with two more trains to be launched in the third quarter of 2018 and the first quarter of 2019, respectively.

Novatek is already working on its second LNG project, the Arctic LNG 2, to be located on the neighboring Gydan peninsula, also in the Arctic.

Earlier this month, Novatek's representatives said the company has increased the planned capacity of the plant to 19.8 million mt/year, up from initially considered 16.5 million mt/year.

Other joint projects that the two countries have been discussing recently involve a $1 billion petrochemical project that Russian Sibur plans to build in Saudi Aramco, as well as Saudi's involvement into Russia's biggest oil service provider, Eurasia Drilling Company, and Novomet oil equipment producer, to supply services and parts to Saudi Aramco, Dmitriyev said.

Russian banks are also considering investments in Saudi Aramco's IPO, Dmitriyev said.

"This is a result of work between Russia's President Vladimir Putin, Saudi King Salman bin Abdulaziz al-Saud and Saudi Crown Prince Mohammed bin Salman that shows that our oil stabilization deal is playing an important role to connect Russia and Saudi Arabia," Dmitriyev said.

"Our oil stabilization deal which led to more than $600 billion of value to petroleum producing countries is really playing a very important role to connect Russia and Saudi Arabia to be able to stabilize oil prices, to grow the Russian economy and the Saudi economy," he said, adding that "frankly, the relationship between Russia and Saudi Arabia over the last few years is an example of positive economic diplomacy."

Russia and Saudi Arabia are key drivers of the OPEC/non-OPEC production cut deal, under which 24 countries agreed to remove 1.8 million b/d from the market to help rebalancing the markets. The deal, effective from January 2017, was extended through to the end of 2018 in December.

As the bilateral ties between the two countries are growing, Russian EDC and Novomet are likely to become one of first foreign companies certified by Saudi Aramco to work in the country's service sector, Dmitriyev said.

-- Nadia Rodova,

-- Rosemary Griffin,

-- Edited by Wendy Wells,

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