Moscow and Riyadh in unlikely alliance in face of threat from US shale boom
It was below minus 30C in the Arctic Circle but the delegations from Saudi Arabia and Russia tossed aside their gloves for a friendly handshake, smiling despite the cold under their fur hats and padded jackets.
Khalid al-Falih, Saudi energy minister, had come to the port in Sabetta in Russia’s far north to open a $27bn liquefied natural gas plant, in the company of his counterpart Alexander Novak and President Vladimir Putin.
“Buy our gas and you’ll save oil,” the Russian leader tells Mr Falih. “That’s why I‘m here,” Mr Falih replied, patting Mr Putin on the shoulder. “I have a great relationship with Alexander, we’ve become partners,” the Saudi minister adds.
The exchange in December highlights how Russia and Saudi Arabia have over the past 18 months forged an unlikely alliance in energy, despite being on opposing sides on other issues such as the Syrian conflict.
The traditional rivals, which combined produce a fifth of the world’s crude, now speak with a united voice on energy-related matters and frame their relationship in strategic terms.
The trigger for a rapprochement that seemed unthinkable a few years ago was a common enemy: US shale oil. The collapse in oil prices from 2014, as hydraulic fracturing unlocked a flood of US crude that caught other producers off guard, set their collaboration in motion.
The partnership is propelled by Mr Putin and Mohammed bin Salman, Saudi Arabia’s powerful crown prince. But it is up to Mr Falih and Mr Novak to execute the strategy and convince the world of its strength.
Speaking to the Financial Times, Mr Falih says the alliance “has the potential to become one of our strongest energy partnerships around the world”.