‘Tatneft will not be allowed to Saudi Arabia – at best, they will give us a service contract’
Does Kazan return the glory to the Russian Switzerland? Tatarstan hosted a secret meeting of Saudi and Russian oilmen
On 18 October, it was the first meeting of the Russian-Saudi working group on cooperation in the field of oil and gas, where Tatneft along with the federal companies Gazprom and Rosneft took part. It is curious that such a momentous event was held without much fanfare and, perhaps, would have remained unnoticed if not a modest post-release published on the Tatneft website. Even the adviser to the RT President on issues of oil and gas fields development Renat Muslimov was not notified of the meeting and he called it unexpected. According to the expert, such cooperation is interesting to the Russian side to a greater extent, while the Saudis are attracted only by its political aspect.
'It is all unexpected. There have not been special attempts in this direction'
For not very clear reasons, Tatarstan was chosen as the site for meetings of Russian oilmen with Saudi officials. Moreover, the information about the visit of foreign delegations to our country was not publicly disclosed. The adviser to the RT President on issues of oil and gas fields development Renat Muslimov spoke about this meeting in the following way: 'It is all unexpected. There have not been special attempts in this direction.'
According to data published on the official website of Tatneft PJCS, the meeting was attended by Deputy Energy Minister Kirill Molodtsov, Deputy Minister of Energy, Industry and Natural Resources of the Kingdom of Saudi Arabia Nayef Al-Utaybi. They were accompanied by the representatives of NK Rosneft PJSC, Gazprom Neft PJSC, NOVATEK PJSC, Tatneft PJSC, LUKOIL PJSC and Gazprom Georesource PLC.
'Our key goal is the development of technological cooperation in the energy field. We are going to develop a foundation for Russian and Saudi companies to implement joint projects in Saudi Arabia, as well as in Russia,' said Molodtsov during the meeting.
The main topic of the discussion was the cooperation in the field of application of new technologies in the oil and gas industry, as well as in exploration and production of hydrocarbons, casinghead gas utilization. Russian companies and research centres had an opportunity to demonstrate their developments in the field of production stimulation and oil recovery enhancement. Also, the guests were familiarized with the technologies of efficiency increase of development of mature fields and development of fields with hard to recover reserves. Given that the Arab oil can not be attributed to heavy one, so the interest in this technology is amazing and gives reason to think that it was not just a meeting of oilmen of the two countries. There is a political undertone, spiced with the growing budget deficit of Saudi Arabia because of the price decrease for 'black gold'.
Apparently, in Russian-Saudi relations have undergone significant warming, if to consider that after the arrival of the foreign delegation to Tatarstan the head of the energy ministry of Russia Alexander Novak went to Saudi Arabia with a return visit.
'They have heaps of oil, what is more — quite cheap one'
It is worth noting that at the meeting of the working group not only the Russian side made proposals – the representatives of the Saudi delegation started talking about a joint production of equipment for oil and gas industry. This is a quite important moment, especially if to consider the fact that previously the Saudis had no ties with the Russian oil industry.
'Only Lukoil attempted to cooperate, but it didn't work out. It is quite difficult to work with Saudi oil companies. They are self-sufficient, they have heaps of oil, what is more — quite cheap one,' said Renat Muslimov.
According to our interlocutor, now for Russia it is extremely useful to cooperate with Saudi Arabia: an opportunity to go side by side with the Saudis, the reduction of production and raising of prices up to $60-70 per barrel will lead to market balancing. At the same time, Muslimov said that it is advantageous for us to work with any countries with a stable political environment.
'Speaking of Tatneft, we will not be allowed to Saudi Arabia. Almost nobody is allowed to the fields. The only thing they will do is to give us a service contract, at best. Drilling, oil recovery enhancement, overhaul — that kind of thing. But they do not practice and are not going to give some land for development, exploration and production,' believes Muslimov.
What is the benefit for Saudi Arabia?
If a potential benefit for Russia from cooperation with the Saudis lies on the surface, what are the motives of the Saudi side? Renat Muslimov does not see a special need, however, suggests that Saudi Arabia is interested in the political aspect of friendship, despite the fact that the thaw in relations might be connected with Syria: 'Such a century today — everybody loves power. If you're weak, no one will not speak to you. Therefore, if Russia shows strength, they start to play with it. Now it is an age of not ideology but power.'
'Now they are also trying to revive the role of OPEC in prices. There is a big fight over this, but it is difficult to say whether it will lead to something. Will they be able to outplay the Americans? I don't think so. The thing is that shale gas and shale oil there have already taken place. They still perform their task (a little late, perhaps, for a couple years), and they will reach large production, which they have planned. All the fuss has broken because of this,' said Renat Muslimov.
However, the expert believes that reaching large volumes will not have a strong impact on the world market. The thing is that despite the active development of alternative energy sources in the United States, they need to have annually about 900 million tonnes of oil due to the large domestic needs.
'They will affect the world market symbolically and politically. They will sell something on the world market, but it is a PR. In order to influence, they need tens, hundreds of millions of tonnes of oil to offer the market. But they will not have such opportunity because the domestic market is big. They will just buy less, but this also will have little effect on the market,' says our interlocutor.
'Secret' meetings of industrialists in Tatarstan
Back to the meeting and its semi-secret organization, Tatarstan has already been the site for 'secret' meeting of industrialists for several times. For example, the Vice President of ultra-influential China National Petroleum Corporation (CNPC) Wang Dongjin almost incognito visited Kazan in 2010.
That time he met with deputy chair of the board of Gazprom Aleksander Medvedev. As it became known from the message on the Gazprom website, the parties discussed in Tatarstan at which prices the Russian gas will be supplied to China. Curiously enough, such significant event passed in Tatarstan almost unnoticed.
Gazprom once again chose Kazan as the site for discussion of the global raw material projects. The Deputy Chairman of the Board Gazprom Aleksander Ananenkov and a member of the Board of BASF SE Dr Hans-Ulrich Engel took part in the discussion of the Nord Stream project implementation.