Russia, Saudis may go beyond their oil alliance with LNG deal

RIYADH, KUWAIT and MOSCOW (Bloomberg) -- Russia and Saudi Arabia are seeking ways to amplify the success they’ve had working together to manage the oil market by reaching new energy agreements, including one on liquefied natural gas.

The two energy giants, which orchestrated an oil-cuts agreement that helped crude prices recover to a three-year high, may announce an LNG pact later on Wednesday, Saudi Arabian Energy Minister Khalid Al-Falih told reporters in Riyadh before a planned meeting with his Russian counterpart. It would be “a big announcement” from Saudi Aramco on a partnership in the super-chilled fuel, Kirill Dmitriev, chief executive officer of the state-run Russian Direct Investment Fund, said in the Saudi capital. Neither gave further details.

Russian President Vladimir Putin made a priority of expanding the nation’s LNG industry last year, and the country is seeking new partners in projects to overtake the fuel’s biggest producers, including Qatar and Australia. Saudi Arabia is looking from Russia to East Africa and the U.S. for natural gas assets as state-owned Aramco, known formally as Saudi Arabian Oil Co., hunts for ways to meet soaring domestic demand.

The Saudis target doubling their own gas production in the next decade, Al-Falih said Wednesday in Riyadh.

Russia last year offered the kingdom an opportunity to join a planned $20 billion LNG project in northern Siberia called Arctic LNG-2 which may start in 2022 or 2023. No decisions on such a partnership have been announced. Al-Falih didn’t rule out buying LNG from Russia, in an interview in December, though he said at the time it wasn’t the most economical option.

Russian companies are interested in building regasification terminals in Saudi Arabia because the kingdom will need these projects if it decides to import LNG, Russian Energy Minister Alexander Novak said earlier this month. Novak is holding meetings today in the Saudi capital.