Hardly 10 months after honoring
the visiting US president, the Saudis are open to a Russian-Chinese consortium
investing in the upcoming Aramco IPO
n the slideshow that is Middle
Eastern politics, the series of still images seldom add up to make an enduring
narrative. And the probability is high that when an indelible image appears, it
might go unnoticed – such as Russia and Saudi Arabia wrapping up huge energy
deals on Wednesday underscoring a new narrative in regional and international
security.
The ebb and flow of events in
Syria – Turkey’s campaign in Afrin and its threat to administer an “Ottoman
slap” to the United States, and the shooting down of an Israeli F-16 jet –
hogged the attention. But something of far greater importance was unfolding in
Riyadh, as Saudi and Russian officials met to seal major deals marking a
historic challenge to the US dominance in the Persian Gulf region.
The big news is the Russian offer
to the Saudi authorities to invest directly in the upcoming Aramco initial
public offering – and the Saudis acknowledging the offer. Even bigger news,
surely, is that Moscow is putting together a Russian-Chinese consortium of
joint investment funds plus several major Russian banks to be part of the
Aramco IPO.
Chinese state oil companies were
interested in becoming cornerstone investors in the IPO, but the participation
of a Russia-China joint investment fund takes matters to an entirely different
realm. Clearly, the Chinese side is willing to hand over tens of billions of
dollars.
Yet the Aramco IPO was a prime
motive for US President Donald Trump to choose Saudi Arabia for his first
foreign trip. The Saudi hosts extended the ultimate honor to Trump – a
ceremonial sword dance outside the Murabba Palace in Riyadh. Hardly 10 months
later, they are open to a Russian-Chinese consortium investing in the Aramco
IPO.
Riyadh plans to sell 5% of Saudi
Aramco in what is billed as the largest IPO in world history. In the Saudi
estimation, Aramco is worth US$2 trillion; a 5% stake sale could fetch as much
as $100 billion. The IPO is a crucial segment of Vision 2030, Saudi Crown
Prince Mohammad bin Salman’s ambitious plan to diversify the kingdom’s economy.
Aramco signs MoU with Novatek
Also on Wednesday, Saudi Aramco
signed a memorandum of understanding with Novatek, Russia’s largest non-state
natural-gas producer, regarding Saudi investment in the latter’s LNG (liquefied
natural gas) projects – specifically, in the $20 billion Arctic LNG-2, which is
expected to be on stream in 2023 and has a capacity of 18 million metric tons
annually.
Saudi Minister of Energy,
Industry and Mineral Resources Khalid Al-Falih told the media in Riyadh, “This
is a big project. It will become part of Aramco’s gas strategy.” The agreement
will be showcased as the centerpiece of the St Petersburg International
Economic Forum in May. (Novatek is also interested in building a regasification
terminal in Saudi Arabia.)
Other Saudi-Russian energy deals
in the making include investment by Aramco and the Saudi sovereign wealth fund
(Public Investment Fund, or PIF) in the Russian company Eurasia Driller, a
major independent driller, which has been seeking entry to onshore and offshore
projects in Saudi Arabia. The Saudi and Russian officials also disclosed that
Russia had made a formal proposal to build two nuclear reactors in Saudi Arabia
and that the contract was expected to be awarded by next year.
Indeed, these deals must be seen
in the backdrop of the Saudi-Russian alliance to sustain the oil price through
production cuts until the end of 2018. In 2015, the Russian Direct Investment
Fund and Saudi Arabia’s PIF joined hands to make investments in projects in
Russia. Last year, RDIF and PIF announced the creation of a Russia-Saudi
Investment Fund with total committed capital of $6 billion to pursue investment
opportunities, primarily in Russia, and in joint ventures that can help Saudi
Arabia’s economic diversification.
Tectonic shift
Historically, Saudi Arabia has
been seen as a pivotal country in the United States’ Middle East energy
strategies, which formed a core template of Cold War-era politics to keep the
former Soviet Union out of the region. The past week’s developments signify
that the tectonic plates are shifting.
And history might repeat.
Reminiscent of the so-called Quincy Agreement of February 1945 between US
president Franklin Roosevelt and King Abdul-Rahman bin Abdulaziz, founder
of Saudi Arabia, the emerging Saudi-Russian energy alliance will most certainly
trigger an overall expansion of relations between Russia and Saudi Arabia,
including in defense and security fields.
Russian President Vladimir Putin
telephoned King Salman bin Abdulaziz Al Saud on Wednesday, when they discussed
“a wide range of bilateral cooperation, primarily in trade and defense
technology” and “expressed readiness to boost meaningful coordination in global
hydrocarbon markets,” according to Moscow. The Kremlin readout highlighted that
Putin and King Salman discussed Syria and Saudi Arabia’s standoff with Qatar –
and, possibly, Iran too.
Interestingly, the Kremlin
statement cited Putin as regretting that “the current crisis by no means
contributed to the consolidation of joint efforts in the struggle against a
terrorist threat or the stabilization of the Middle East in general.” Indeed,
it cannot be lost on the Saudis that what distinguishes Russian diplomacy is
that unlike the traditional US tactic of exploiting regional tensions and
divisions, Moscow focuses on beneficial cooperation. Quite obviously, the
Russian military bases in Syria or Russia’s axis with Iran do not impede a
full-bodied Saudi-Russian strategic relationship.
Suffice to say, Russia is
positioning itself, in geopolitical terms, to shape outcomes in the Middle East
and to enhance its standing as a great power, while also advancing its
economic, political and security interests. The contrast with the US couldn’t
be sharper.
Radio Free Europe/Radio Liberty
reported last week that while addressing a closed-door meeting of the Russian
Union of Industrialists and Entrepreneurs, a prominent group of industrialists
and business tycoons, in Moscow on February 9, Putin predicted that “those who
are doing this [imposing sanctions] will themselves tire of it soon.” The news
from Riyadh signals that Putin’s prediction is well grounded.
When Russia teams up with China
and Saudi Arabia in making such massive investments in the energy field, the US
sanctions aimed at denying Western capital and technology to stymie Russia’s
oil industry have been rendered meaningless.
Photo: Saudi Energy Minister
Khalid Al-Falih and Russian Energy Minister Alexander Novak attend a news
conference at the Ritz-Carlton hotel in Riyadh on February 14, 2018. Photo:
Reuters / Faisal Al Nasser
Sem comentários:
Enviar um comentário