$1bn energy fund confirms Saudi-Russia partnership



More than 18 months into Saudi Arabia's landmark economic transformation programme, the kingdom still retains the ability to surprise outsiders with its forward ambitions, and the past week containing several significant milestones.

First came the landmark decision to lift restrictions on women drivers. On Sunday there was the announcement of Virgin Group chairman Richard Branson's involvement in the country's enormous Red Sea tourism project. And yesterday came the news that the country would partner with Russia for a new US$1 billion energy fund.

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The economic partnership is not the first effort of its kind between the two countries; Saudi Arabia's Public Investment Fund and the Russian Direct Investment Fund in 2015 signed a memorandum of understanding to co-invest as much as $10bn. 

But the new $1bn fund is the latest signifier of the improving economic ties between Saudi Arabia and Russia.

The fund's announcement comes as King Salman prepares to visit Moscow this week, the first Saudi monarch to do so in an official capacity. A slew of further deals are expected to be announced to coincide with the visit, including several large oil and gas deals, with Reuters also reporting a "large" deal in the Russian infrastructure sector, including the country's toll roads.

Such deals, and the visit itself, are particularly significant given the traditionally frosty political relations between Saudi Arabia and Russia, with each country finding itself backing opposing sides in Syria's civil war.

In spite of such ongoing differences, the increased economic co-operation between Saudi Arabia and Russia – not least as the principle brokers of last year's historic oil production cut agreement by Opec and non-Opec producers – point to a change in relations, which indicate ever deeper ties between the two countries.  

Many of the political differences between the two nations may well not go away for some time; but the deepening economic relationship is yet another sign of the kingdom's changing outlook and its ability to take bold new steps as part of its transformation.

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