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What Would A Saudi-Russian Partnership Mean For World Energy?
As we recently noted, Russia and Saudi Arabia appear oddly allied in recent weeks. What happens when two nations, that together account for more than fourth quarter of global oil production, begin collaborating on future energy projects?
OilPrice.com's Gaurav Agnihotri explains...
Russian President Vladimir Putin met Saudi Prince Mohammad in St. Petersburg on June 18 at a meeting in which Saudi Arabia and Russia, the world’s leading two oil giants, decided to form a working group for joint energy projects.
“At the end of the year, in October, we will summon a meeting of the intergovernmental commission, which hasn’t operated for five years,” Russia’s Energy Minister Aleksandr Novak said recently at the St Petersburg economic forum. He further clarified that his country was not looking to replace its existing oil and gas partners but wanted to create newer ones. “There are no specific projects in the energy field yet, we only have an agreement to create a working group between our ministry and the Saudi Arabian oil ministry, which, together our companies will work on specific projects,” the Energy Minister told reporters.
Image Source: Forbes
What are these ‘specific’ projects that Russia is talking about? Why are the two biggest producers of oil in the world now cooperating? Is this a natural response to the U.S. and EU sanctions that have targeted Russia’s oil and gas industry, specifically its arctic exploration and unconventional drilling sector?
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Russia – Hedging its risk and shifting its focus towards Asia
In May, Russia’s oil output reached a record 10.78 million barrels a day, which was very close to the Soviet era production of 1987. “Russian output has proven to be pretty resilient to the fall in prices, and they will not have a problem keeping production up for the next year or two,” said James Henderson of Oxford Institute of Energy Studies. Russia’s economy is heavily dependent on oil and gas revenues as they account for more than 50% of the federal budget. The U.S. and European Union sanctions after the Ukraine crisis have affected Russia’s energy sector and the sustained drop in oil prices has made the situation even more challenging for the Kremlin. Following the recent announcement by OPEC to maintain its production level of 30 million barrels per day, Russia has no choice but to produce more oil in order to maintain its own market share. "We are losing around $40 billion per year due to geopolitical sanctions and we are losing some $90 billion to $100 billion per year due to oil prices falling 30 percent," Russian Finance Minister Anton Siluanov said in November 2014.
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Image Source: Forbes
With a focus on partnering with rising Asian economies that have a huge domestic demand for oil and gas, Russia’s biggest oil company Rosneft has been signing new crude oil supply deals with Chinese and Indian companies, in an effort to form long-term strategic partnerships.
Saudi Arabia’s future energy plans – Does Russia fit in?
The desert kingdom is in the process of restructuring its biggest National Oil Company, Saudi Aramco, by separating it from the country’s powerful and influential oil ministry. With nearly 16 percent of the world’s proven oil reserves and a massive sovereign wealth fund, Saudi Arabia has enough cash reserves to weather the slump in oil prices.
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Saudi Arabia’s budget is insulated from oil price movements
Saudi Arabia is all set to go aggressive in its spending on new exploration projects. “[t]he bulk of this spending (exploration and production) will be in our upstream activities to ensure we maintain adequate spare crude oil production capacity to help stabilize the world oil market whenever disruptions occur,” the 2014 Aramco annual report stated.
The report goes on to state that Asia would be an important growth area for Aramco’s future investments. However, the report does not reference any future collaboration with Russia. In fact, Russia and Saudi Arabia have, in the past, opposed each other on issues such as Saudi Arabia’s attack on Yemen, OPEC’s production policy and the Syrian war. However, a lot has changed since Putin and Prince Mohammad met in St. Petersburg.
A joint nuclear agreement which included building new nuclear power reactors was one of the six co-operation documents signed by Russia and Saudi Arabia during the meeting. Currently, Saudi Arabia does not have any industrial nuclear power plants.
What could be the scale of a potential Russia- Saudi Arabia relationship?
Saudi Arabia has a high rate of domestic consumption of oil to satisfy its electricity needs. The desert kingdom is planning to build around 20 nuclear reactors which would provide it with around 15 percent of total power in the next 20 years. If Saudi Arabia takes Russian assistance in developing its nuclear energy program, the quantum of investments could be in the range of $30 to $40 billion. On the other hand, Saudi Arabia might be interested in investing in Russia’s unconventional shale assets and deep water exploration.
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Given that U.S. and EU sanctions limit the transfer of new oil and gas technology to Russian state oil firms, the logical conclusion would be that Russia would seek Saudi technology related to enhanced oil and gas recovery and advanced drilling, especially for use in the older fields in West Siberia. With a growing list of global research centers in Beijing, Houston, Aberdeen, Massachusetts and others, Saudi Arabia’s national oil company Aramco is the biggest global investor in new oil and gas technologies.
Russia and Saudi Arabia have met multiple times over the past year to discuss oil production and exporting strategies. While the two sides have been unable to agree to coordination, owing to Russia’s unwillingness to cut production, the latest meeting suggests both countries see a strategic opportunity in some sort of cooperation. We will have to wait and see what they have in store.
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Isolated Russia!
Saudi hates America......proof.....9/11
Maybe Vlad can ask them how they pulled off 9-11.. (I'm sure he already knows...)
Saudi & Russia Oil agreement creates a New OPEC
BTW, don't forget that the Saudis had threatened the Rooskies with terrorstuff during the Sochi Olympics and backed down.
So they're buddies.
Now, starting a deal amongst the two just might have a few things to do with Some (shhhhhhhh, don't let anybody hear this) Pipelines!
Since January, there is a new king in Saudi Arabia.
The Whore Prince Bandar Bush is out
game is changing - more than one way to get technology other than Exxon & Shell
I like this partnership. I've been looking into moving to Russia, permanently.
http://atlantablackstar.com/2014/01/08/8-worst-countries-black-people-tr...
I think Russia answered ´Thanks for telling us where to send the retaliation cruise missiles if anything bad happens´
But the wannabe-blackmailer is gone, and the new Saudi leaders may have to seek cooperation in the (get out of the) dollar problem.
The US could always take the boot off Iran's neck... #Realpolitik
>>> Maybe Vlad can ask them how they pulled off 9-11..
It is simply not credible that the USA spy agencies were unaware of the 9/11 operation well in advance.
Sorry but I think 911 was done by MOSSAD and CIA through the MIC. I cannot believe 15 Saudis hijacked four planes with box cutters and then either forced the pilots to crash into the towers or they flew them themselves. And what about building 7? We never seem to talk about that.
It was allowed to happen by our own government, just like Boston was .
Time for another one now as the borders are wide open and many will say "who coulda known "
I imagine Putin is grinning from ear to ear as the demise of USD and the price of oil in the fiuture are now guaranteed and all because of the wisdom of BHO an crew. Fucking idiots at a minimum.
Follow that false trail all you want.
Maroon.
Would form a fairly good sized oligopoly in the crude and gas business, no?
But not to worry, Loretta Lynch'll take them apart just like she did FIFA.
Booyah!
#energyoligopoliesmatter
How'd the Saudis get NORAD to stand down, and what about urban moving systems, odigo, zim shipping, and the dancing israelis and van full of explosives?
Saudis posing as members of the Joint chiefs and mossad?
These space lizard jesuit luciferians shape shifting annunaki will destroy us all!!
Don't forhet!
Just aftyer 9/11 happened when airspace was closed and just after the Boston kettleboomer, Saudi flights quickly departed US soil.
Nah, nuffer coincidences thingamajigs, nothing to see or hear here, so shut up and back to work, serfs
BTW, Has anybody found the gold disappeared from the vault below the WTC? Didn't think so.
Don't forget the $2.8 trillion missing from the pentegram under the control
of the dual national rabbi.
9-11 was the biggest daylight robbery in history.
Si!
The pallets of cash dropped off by the USAF in Baghdad and flown back out by the USAF to Switzerland were just garnish.
Somebody's gettin' mighty rich!
Don't forget the oracles that placed large amounts of put options on American Airlines. I am sure it's all kosher.
It was Bush. He put the gold on his bicycle and rode off with it.
"What happens when two nations, that together account for more than fourth quarter of global oil production, begin collaborating on future energy projects?"
Not that I'm a stickler for grammar and have made my fair share of typo's but a little proofreading helps.
Nobody "proofreads" anymore.
what is more important than the production is the amount of exports and together they're far higher than one quarter of the world's total.
Am I missing something or is it so obvious i should Know? One quarter surely?
I think the the 28-pages meme has been deliberatly hung out in american pop culture to head off this very scenario - I actually read an article in newsweek (MSM prop personified) the other day, where a retired FBI agent was accusing the CIA of conspiring with KSA to do 911 .. a regular article, not an editorial or comment.
They are prepositioning the 28-pages meme (and ISIS) as an excuse to attack KSA because they saw the shift in loyalty to russia and china coming. Expect it to blow wide open as the saudis get closer and closer to russia & china, and be combined with ISIS hysteria to be used as an excuse to launch a war agains the kingdom and annex saudi arabia.
My 2 cents is on 911<-->KSA connection being a frameup for this very reason. The saudi ethnicity of the hijackers has probably been used as leverage over the saudis since 2001 and they prob. tired of it which is why they leaning to chinese and russia.
Bingo. Nailhead, meet hammer.
It would mean bombs on Saudi Arabia. Bombing Wahhabi scum would be a good thing.
Until the Saudi backed ISIS/ISIL/NUSRA scum get out of Syria then f**k the Saudis. They and the NWO have murdered tens of thousands of innocent Syrians.
the arrogant jew fascists in israel need to be taken down a peg or three.
How much experience do the Saudis have drilling through permafrost?
Maybe for offshore stuff, but again, drilling through ice is not the same as drilling off the coast of Arabia.
However, if Saudi Arabia starts selling oil in dollars and yuan....
Jenga!!
Americans are pretty good at taking TPP and Obmacare up the arse.
Greatest military, greatest generation and all that shit. Clown show.
Petroruble coming
Petroyuan, Putin is onboard with this!
Yup. Ruble, Saudi Riyal and Yaun make new currency "block" or currency, period?
Fiat's fiat, but in war, all things is possible
In war only gold is possible, or very long term leases on defendable real estate(Lend Lease).
Scenario: Saudis cozy up with Russians. Good bye petrodollar. Saudis get blamed for 9/11 or a new terrorist attack. US attacks the Saudis or fights a proxy war using Shiite fighters.
Oil is real. The world can't do without it.
Wall Street is fake.
What if they cut off all that oil for months and only sold oil to China? All the ``enemies`` economies would go down in flames.
Saudi Arabia is warming up to Russia because they want nuclear reactor and missile technology to counter Iran.
Which Vlad already said a few weeks ago, that he'd give them.
Remember, there was a second level Saudi prince met with the Rooski FM in StPete during the SPIEF.*
Ain't that SPIEFY?
* News to that extent was carried by a few of the Gulf media outlets.... well, kinda hinted that-a-way
The Iranians are Persians who had Islam jammed down their throats by the Arabs. Teh Saudis have backed ISIS/ISIL/NUSRA scum in Syria killing Syrians and Syrian Christians. Iran and their allies Hezbollah have been helping to protect all Syrians. I hope the House of Saud gets what they deserve.
What they deserve is a revolution within their own borders. Which is on its way, demographically speaking...
"Two-thirds of the nation's 29 million-person population is under age 30. Thirty-seven percent of all Saudis are 14 years old or younger..."
http://www.ibtimes.com/saudi-arabias-youth-unemployment-problem-among-ki...
It seems fairly obvious that the Saudis have determined that, in light of their extreme displeasure with recent behavior of the USA, having nuclear weapons is in their best interests. And they are correct.
After what Clinton did to Serbia any nation that does not think they need nuclear weapons is naive.
That lesson was reinforced with Bush and Iraq and the NATO and Libya.
Would the French been bombing Libya if Ghadafi had the ability to torch Paris? Not very likely.
To answer the headline question:
It would mean that one or the other of them would have to stop exporting oil, or the natural competition between them for sales would soon destroy any agreement made.
It would also mean that Russia would have to turn on its long time ally Iran, or Saudi Arabia's immediate security concerns would quickly overwhelm its concerns with Russia. Turning on Iran would also rather quickly have implications for that much-forgotten other energy Giant in Asia...Kazahkstan, who happens to be right along Russia's pipeline route to China.
Anyone think the strategic necessities for Saudi Arabia or Russia great enough to underwrite those sacrifices?
Thought not.
Maybe they're just exploring options at this point?
So much for the Saudis hating the Russians SO much...lmfao.
The House of Saud are evil scum but they know the world is changing and hitching your wagon to Obaola-Trayvon Amerika is a bad strategy. Not like the Republicans are any opposition to Obola.
Iraq tired of getting stabbed in the back by US have turned for help from Iran. Russia and China already operating in Iraq. SA is being squeezed out and needs to turn to another protector.
The middle east no longer has a use for US. The US will continue to bribe Packistan to keep open the opium trade from Afghan in order to sustain funding for the covert US gov't run by the CIA. This door is closing as well.
Iran, SA, Iraq and Russia will control energy.
The US is being squeezed out of the world and are turning on their own population.
+100
Putin also closed down the USA Afghan corridor for resupply so the USA has to use Pakistan for resupply.
+100
On observation that the USSA is turning on it's own population. ObamaCare and TPP are prime evidence.
I'm running away.
A Saudi-Russian partnership will definitely make the neocons shit in their depends. Predictions:
1) The RUSSIANS will thereby save the world by stabilizing the mideast and the Saudis will make their peace with Assad.
2) The neocon initiatives in Ukraine and Syria will die on the vine.
3) ISIS will wither and die if the gulf arabs withdraw their support, much to the consternation of the US evil empire.
4) Look for a rebirth of pan-arab socialism, stability in Egypt, and new strongman in Libya, America shut out EVERYWHERE.
5) USA weapons systems will lose out to Russian product. Frantic USA efforts to foment war and terrorism will come to nothing.
If Russia sells some of their better weapons then it is game over. The Kornet's that Hezbollah got via Syria and Iran were devastitingly effective. The S300 and S400 plus anti ship stuff is top notch.
The F-35 can barely fly so the Su-31 should be able to wax it pretty easily.
America is just totally corrupt.
I am sure you meant Su-35, not Su-31 :)
The Russian jet models designations are confusing because some are export versions.
The Rand Corp did an analysis of China versus USA over Taiwan called Pacific Vision or something.
It was USSA F-18s, F-22s and F-35s versus Chinese Su27s, Su30s and Su35s.
http://investmentwatchblog.com/f-35s-clubbed-like-baby-seals-the-f-35-ca...
US defense companies are about getting more money from CON-GresZ. The stuff is just getting worse.
https://biblicisminstitute.wordpress.com/2015/03/17/the-truth-about-the-...
They can never take over because they don't embrace and celebrate homos. We all know it's the most important issue of our time
Instant WWIII comes to mind. House of Saud even dreams about leaving the American Fold they won't last 24 hours.
Saud in the shits...
On the ONLY front that really means ANYTHING to these rabid muslims; they feel they have been betrayed by the USA from that original handshake in 1945.
America leans to Iran and then there is Turkey and now Sissi's Egypt, both removed from Saud in terms of ideology if not in terms of money. So its getting to be a lonely place for the kings of a Kingdom now feeling the cold breath of increasing isolation from the West,seeing they are being more and more challenged from within the Sunni rabid camp.
Whence the need for new alliances even with the Russian devil who rules over a continent the size of the Steppes...
8000 nuclear warheads are not to be sneezed on especially if Russia is the OTHER fossil empire for the ages to come.
The enemy of my future enemy can be my friend... as there is no knowing from where lightning will strike!
Maybe the Saudis finally caught on that "Greater Israel" includes a big chunk of where they keep their best camels.
http://www.ahavat-israel.com/eretz/future
http://www.globalresearch.ca/greater-israel-the-zionist-plan-for-the-mid...
although... I tend to believe a very small handful of religious nuts really take that seriously.
But I'm sure Likud/Shas intend to ethnically cleanse what remains of Palestine, take part of Syria under the ruse of protecting Druze, and part of Lebanon after they fire a harmless rocket or two at themselves from sheeba farms.
Saudis know they're next, they can read the EU US balance sheet as well as the Russians
19 June 2015, by Dmitry Zhdannikov and Denis Pinchuk - St Petersburg, Russia (Reuters)
http://www.reuters.com/article/2015/06/19/us-gazprom-shell-exclusive-idUSKBN0OZ0IQ20150619
Gazprom is building a global strategic alliance with energy major Royal Dutch Shell that will include asset swaps and allow the Russian gas giant to penetrate new markets, its chief executive told Reuters.
Sanctions? Only for the 'little' people.
What it would mean?
MONOPOLY
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It may also mean
W
W
3
Because Satan America & its poodle allies think that they own all the oil reserves