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Russia, Saudi Arabia in talks on new oil, gas, petchems, nuclear cooperation

Moscow — Russian and Saudi Arabian companies are considering expanding existing energy cooperation to include new joint oil and gas, petchems and nuclear projects, Russian news agency RIA Novosti reported Monday, citing a protocol signed at the end of the last meeting of the intergovernmental commission in mid-June.

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Talks on bilateral energy cooperation have increased significantly since the two countries reached a crude production cut agreement in 2016. Officials continue to meet regularly, and projects including oil and gas exploration and services, LNG, petrochemicals and new technology seen as the most promising areas for new cooperation.

The document said that during the meeting Russia proposed a number of new oil and gas projects and Saudi companies including Aramco, Sabic and Ma'aden are considering the proposals.

Russian energy minister Alexander Novak and his Saudi counterpart Khalid al-Falih chair the intergovernmental commission.

According to the document Saudi Arabia is interested in LNG projects in Russia including Gazprom's Baltic LNG and Rosneft's Far East LNG projects. Saudi officials previously said they are interested in taking part in Novatek's growing LNG production in the Russian Arctic. They missed out on joining the next project to be developed there -- Arctic LNG 2 -- after Novatek sold minority stakes to France's Total as well as Chinese and Japanese investors earlier this year.

Saudi Aramco is also in talks with subsidiaries of Russian state-owned pipeline operator Transneft on cooperation on diagnostics at Saudi oil and gas infrastructure projects.

Gazprom Neft is interested in downstream cooperation with Saudi Aramco, in line with proposals made in Dhahran in February 2019, the document said. The two companies signed a memorandum on expanding bilateral cooperation in 2017. They are also considering cooperating on AI and other new technology.

Russia's Tatneft is interested in developing cooperation on oil and gas and petrochemical projects, the protocol noted, without providing further details.

Russia's Direct Investment Fund Aramco and the Saudi Public Investment Fund are considering a project to produce equipment to mechanize oil production worth $659 million, according to the protocol. RDIF and Aramco have signed the main terms for purchase of a stake in the Novomet services company, which is currently undergoing due diligence.

The two countries also discussed bilateral cooperation in third countries. Saudi Aramco is considering working with Lukoil on two gas projects in Uzbekistan, the protocol said.

Russia and Saudi Arabia also plan to sign a memorandum of understanding on cooperation on geology and mineral resources by the end of this year. SABIC is considering joining a methanol production project as part of Rosneft's Far East Petrochemicals project and talks continue between Saudi Arabia and Russian petrochemical company Sibur on building a rubber plant in Saudi Arabia.

Russia also presented its new mid-sized nuclear power plant, based on VVER-600 reactor, to Saudi Arabia during the meeting, according to the document.

The two sides previously discussed construction of three or more nuclear power plants with VVER-1200 reactors.

-- Rosemary Griffin, rosemary.griffin@spglobal.com

-- Edited by Jonathan Dart, newsdesk@spglobal.com