Russia and Saudi seal key energy deal

The world's two largest oil exporters, Russia and Saudi Arabia, have signed a key energy cooperation agreement worth up to $25 billion.

    Vladimir Putin (L) and Prince Abd Allah are trying to improve Russia-Saudi relations

    Saudi Arabia's de facto ruler, Crown Prince Abd Allah bin Abd al-Aziz, wound up a historic three-day visit to Russia on Thursday by signing a

    five-year oil and natural gas accord

    .

    The visit, the first by a Saudi ruler since 1926, marks a

    rapprochement between the two countries who, between them,

    control a substantial proportion of the world's hydrocarbon

    resources.

    The Russian business daily, Kommersant said Saudi investment in

    Russia, resulting from an improvement in relations, "could lead to a

    huge leap forward for Moscow" in the energy sector.

    American concerns

    Moscow is angling for a share in the development of Saudi

    Arabia's huge reserves, and is also seeking investment in its own oil

    and gas industry.

    But officials in Moscow were at pains to ensure the pact was not

    seen in Washington as a deal aimed at

    securing control over the international oil and gas market.

    "It does not look like we are talking about an anti-American

    plot. At least, Moscow is doing everything it can to make sure that

    this is not (how it) is being interpreted by our Western partners,"

    Kommersant reported.

    Saudi Arabia sits on about a quarter of the world's

    known oil reserves, and Russia is the biggest oil exporter

     outside

    the Organisation of Petroleum Exporting Countries (OPEC).

    Oil prices

    This means the two

    producers' combined weight could enable them to exercise a predominant

    influence on global oil prices.

    Prince Abd Allah's visit to Russia
    is the first by a Saudi ruler since

    1926

    Saudi Oil Minister, Ali Ibrahim Naimi, noted the

    current state of the oil market served as proof of the two

    countries' success at keeping it stable.

    His Russian counterpart Igor Yusufov agreed.

    "We feel ourselves

    responsible for the world market's stability. So the signing of our

    cooperation accord was quite timely," he said.

    Mutual mistrust

    Prince Abd Allah's visit also signals a marked improvement in Russo-Saudi

    relations after decades of coolness arising from Saudi

    mistrust regarding Moscow's ambitions in the Islamic world

    .

    Recently, Russia also accused Saudi Arabia of turning a blind eye

    to Muslim charities' funding of Chechen separatists.

    Moscow only reopened its embassy in Riyadh in 1991, and even in

    2002 trade between the two countries was still worth less than 67

    million dollars.

    However, relations have improved gradually, and the Saudi

    estrangement with the United States over the September 11 attacks

    appears

    to have accelerated the process.

    Islamic world

    Russian officials stressed the importance of the Saudi

    visit as a key step in Moscow's wide-ranging approach to better

    relations with the Islamic world.

    This was highlighted last month when

    President Vladimir Putin said Russia planned to join the

    Organization of the Islamic Conference.

    Riyadh will back Moscow's application to become an affiliate

    member, a Russian diplomat said on Thursday, citing the

    "understanding" expressed by Saudi officials.

    SOURCE: AFP


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