“Bilateral cooperation between Russia and Saudi Arabia in the trade and economic sphere has reached an unprecedented high level. Per last years a comprehensive breakthrough has been made in relations,” said Alexander Novak, Minister of Energy of the Russian Federation and co-chairman of the Russian-Saudi Intergovernmental Commission on Trade, Economic, Scientific and Technical Cooperation, on the sidelines of the Russian-Saudi Investment Forum in Riyadh. The forum, organized by the Russian Direct Investment Fund (RDIF) and the state investment agency of Saudi Arabia Sagia, is timed to coincide with the state visit of Russian President Vladimir Putin to the kingdom.

On Monday in Riyadh, in the presence of Russian President Vladimir Putin and King Salman ibn Abdulaziz, Russia and Saudi Arabia signed 21 documents concerning the development of bilateral relations. About 20 more documents were signed before Mr. Putin's plane landed in Riyadh. Meeting the President of Russia in his palace, King Salman highly appreciated the prepared bilateral documents, noting the investment cooperation between the two countries. “We welcome the investment of RDIF and PIF (Saudi sovereign wealth fund.- "b") in more than 30 projects and emphasize the important role of the first meeting of the Russian-Saudi Committee, which will take place during your visit,” he said.

OPEC +: the main thing is balance

A special place in Russian-Saudi relations is occupied by partnership under the OPEC+ deal. For President Putin's visit to Riyadh, a charter of long-term cooperation between the OPEC countries and countries outside the cartel was prepared. The document was initialed at a ministerial meeting in Vienna this summer, but the solemn signing was postponed until Vladimir Putin's meeting with King Salman. “This is not only about interaction in terms of adjustments in order to balance the market, this is a much broader interaction based primarily on the development of our joint cooperation in this area and the bilateral and multilateral format,” said Alexander Novak. He explained that in this agreement any country will not have a leading role. The Russian minister also assured that the countries participating in the OPEC + deal are not discussing the revision of the terms of the agreement.

Recall that on the eve of his visit to Riyadh, Vladimir Putin said in an interview with Arabic television channels that oil reserves should be reduced to a reasonable limit so that they do not put pressure on its prices.

“I think that the president was referring to the successful experience that OPEC + has in balancing the market and taking certain actions in this regard, if necessary,” Alexander Novak explained to reporters.

The words of the Russian president were commented to journalists by Saudi Energy Minister Prince Abdulaziz bin Salman. “I really, really liked the words of President Putin. He understands that we must take any action to prevent disasters in this market. Inventories are usually high in the first quarter. I think we need to do more work to make sure stocks are back to normal. But I would not like to anticipate the decision of our meeting (OPEC+.- "b") in December,” he said.

Strategic vision

Prince Abdulaziz has just been appointed as the kingdom's energy minister. At the same time, he got the post of co-chairman of the Russian-Saudi intergovernmental commission on trade, economic, scientific and technical cooperation. In this capacity, he emphasized that contacts are developing not only at the state level, but also at the level of private business. Answering journalists' questions, he did not rule out that in the future it will be not only about Saudi investments in Russia and the work of Russian companies in the kingdom, but also about joint investments of the two countries in projects "not only in the region, but throughout the world" . He highlighted the role of the sovereign wealth funds of the two countries - the Saudi PIF and the Russian RDIF. “They will make a lot of investments, implement many joint projects. But I think the main thing that we saw today is that investments will come from different directions. And this is good,” the minister stressed.

For his part, speaking about the documents signed during the visit, Alexander Novak, in addition to the charter, highlighted:

• program of the Russian-Saudi strategic cooperation of the high level of the joint IGC(according to the minister, it is based on the national development priorities of Russia until 2024 and the Saudi Vision-2030 development concept for the kingdom);
• protocol between the ministries of energy of the two countries(the “road map” of energy cooperation includes 24 initiatives in the oil and gas sector, nuclear power and other related areas, noted Alexander Novak);
• agreement between governments on the mutual establishment of trade missions(as the minister emphasized, last year the trade turnover between the countries grew by 15% and for the first time in several years exceeded $1 billion, over the eight months of this year the trade turnover has grown by 38% - but at the same time, the minister believes that the potential for trade cooperation is much greater ).

For its part, RDIF gave Special attention an agreement signed in the presence of the President and the King on the entry of a consortium of Saudi Aramco, PIF and RDIF into the equity capital of Novomet, an oil production equipment manufacturer. This is the first joint investment by RDIF and Saudi Aramco as part of the energy platform created in 2017 with the participation of PIF, aimed at investing in companies in the energy sector of the Russian Federation with the possibility of subsequent business localization.

A cooperation agreement was also signed at the palace between the largest petrochemical company SABIC, RDIF and ESN on the construction and operation of a methanol production plant with a capacity of up to 2 million tons per year in the Amur Region in Russia.

Prior to this, at the site of the investment forum, Saudi Aramco signed about a dozen memorandums of understanding with Russian companies. Among them are Gazprom Neft, Pipe Metallurgical Company, Galen Company, Chelyabinsk Pipe Rolling Plant, Angara Service, Intratool group of companies, Technovec and Integra companies.

• RDIF, Russian Railways and Saudi Railway Company(SAR) agreed to explore the possibilities of cooperation in the field of transport infrastructure construction. The agreement aims to jointly expand the SAR rail network.
• RDIF and Saudi Technological Development and Investment Company(TAQNIA) agreed to cooperate on the development of the commercial use of the rocket and space complex Russian production"Start-1". In addition, the agreement provides for the implementation of joint research and production activities for the design and production of additional components of the launch vehicle, which should improve its quality characteristics and commercial demand.
• RDIF, the Moscow Institute of Physics and Technology (MIPT) and the National Center for Big Data and Artificial Intelligence at the King Abdulaziz Center for Science and Technology in the Kingdom of Saudi Arabia have agreed to jointly develop the high-tech field of artificial intelligence.

During the investment forum, RDIF head Kirill Dmitriev also mentioned the plans of Russian companies to build factories in Saudi Arabia, in particular for the production of insulin and other medicines.

Other businessmen also spoke about their projects. Thus, the main owner of AFK Sistema and chairman of the Russian-Arab Business Council Vladimir Yevtushenkov mentioned plans for cooperation with the kingdom in the agro-industrial sector, in the region high technology and infrastructure.

“We believe that the investment climate in Saudi Arabia today has changed significantly and has become more comfortable for any foreign investors, including those from Russia,” he stressed, speaking at the forum.

Saudi Arabia is the world's largest oil exporter. This creates the prerequisites for the creation of a sovereign wealth fund in this country. However, for a long time, Saudi Arabia hesitated to use the sovereign wealth fund as an active participant in global financial markets. Geographical position, economic condition and the size of the country's population require a significant degree of financial liquidity and a low degree of risk. For this reason, the investment policy of this country differs significantly from other countries in the Persian Gulf. Only in April 2008 did Saudi Arabia announce the creation of a sovereign wealth fund. Until that time, its overseas assets were managed by the Saudi Arabian Monetary Agency (SAMA), the Central Bank of the Kingdom of Saudi Arabia.

In 2008, the agency's non-reserve foreign assets exceeded $300 billion. The reserves amounted to about 30 billion dollars. In addition to these funds, the Saudi Arabian Monetary Authority (SAMA) managed approximately $60 billion in assets, including Saudi Arabian pension funds, on behalf of and on behalf of other agencies. These assets were invested primarily in liquid, low-risk bonds, but also included equities and high-risk bonds, making the agency a conservative investor. The McKinsey agency estimates the fund's investments in cash and deposits at 20%, investments in fixed income financial instruments at 55-60%, investments in shares at the level of 20-25%, the share of investments in US dollars - up to 85%. At the same time, other data are also known, according to which the share of the fund's investments in US dollars is about 75%, in other currencies - about 25% (see Table 64) .

Table 64

Investment structure of the Saudi Arabian Fund

Source: .

According to the Institute of Sovereign Wealth Funds (SWF), Saudi Arabia's SAMA Foreign Holdings is the world's third-largest fund behind the UAE and Norway. Its assets are about 439 billion dollars. The main source of income is proceeds from oil exports. About 65% of the fund's investments are investments in fixed income financial instruments, about 25% - investments in shares, about 10% - investments in deposits.

According to the Institute of Sovereign Wealth Funds (SWF), this fund has a low Lenaburg-Madwell Transparency Index of 2 in autumn. Saudi Arabia's SAMA Foreign Holdings Fund is a fund in the country's Central Bank. The Saudi Arabian Monetary Agency (SAMA), the central bank of the Kingdom of Saudi Arabia, was established on November 4, 1952. The Central Bank of Saudi Arabia is the second oldest bank among the Arab countries. It manages the Saudi Arabia SAMA Foreign Holdings fund. The Saudi Arabian Monetary Agency (SAMA) acts as the Central Bank of Saudi Arabia and manages the government's assets and accounts. The main functions of the Saudi Arabia Monetary Agency (SAMA) are:

• managing the issuance of the national currency, the Saudi rial; functioning as a government banker;
• management of commercial banks;
• management of the country's foreign exchange reserves;
• conducting monetary policy;
• measures to ensure the growth and stability of the financial system.

The management structure of the Saudi Arabia Monetary Agency (SAMA) includes a board of directors, a manager, a vice-manager, a legal department, a banking institution, a general investment department, a technical and administrative department (see Table 65) .

As of June 30, 2010, the balance sheet currency of the Saudi Arabian Monetary Agency (SAMA) amounted to 589.094 million rials (as of January 14, 2011, 1 Saudi rial was equal to 8.007 Russian rubles), (see Table 127). In the structure of assets, investments in securities abroad accounted for the largest share (1144.319 million rials). In the structure of liabilities, state deposits accounted for the largest share (860.301 million rials). In the first quarter of 2010 there was an increase in government deposits and government agencies and institutions by 2.6%.

Table 65

Management structure of the Saudi Arabian Monetary Agency (SAMA)

Source: .

As shown by the dynamics of the exchange rate of the Saudi rial against the Russian ruble over the past 180 days as of January 15, 2011, the exchange rate of the Saudi rial fluctuated in the range from 8.3912 rubles per rial to about 7.9 rubles per rial (see Fig. 22 ) .

Fig.22.

Dynamics of change in the ratio of the exchange rate of the Saudi rial to the Russian ruble.

Source:

Saudi Arabian Monetary Agency (SAMA) revenue as of June 30, 2009 according to the profit and loss account amounted to 3.042 million rials. Among the expenses, the largest share was made by the contributions of the Saudi Arabian Monetary Agency SAMA to the Public Pensions Agency (see Table 66) .

Table 66

Saudi Arabia Monetary Agency (SAMA) Income Statement as of June 30, 2009 (million rials)

As shown by the dynamics of changes in the financial position of the Saudi Arabian Monetary Agency (SAMA) since 2005. to 2010 (first quarter), in general, there was an increase in assets. The largest share in assets was occupied by investments in foreign securities, which also had an increasing trend. Among liabilities, the largest share belonged to government deposits (see Table 67).

Table 67

Dynamics of changes in the financial position of the Saudi Arabia Monetary Agency (SAMA), data at the end of the year, million rials

Commitments
Issue of banknotes
Government deposits
Deposits of commercial banks
Deposits of foreign
organizations in rials
Other obligations

Deposits in foreign
Investments in foreign
securities
Other assets

Source: .

In 1971 public investment fund(Public Investment Fund (PIF)) of Saudi Arabia. Its purpose was to contribute to the development of the national economy of Saudi Arabia. In 1974 The Public Investment Fund (PIF) received the authority to place assets in shares of joint ventures of the national economy.

The Public Investment Fund (PIF) is managed by the Ministry of Finance of Saudi Arabia. On April 15, 2008, the creation of a new sovereign fund of Saudi Arabia, Sanabil al-Saudia, was announced, the capital of which was planned at 5.3 billion dollars (20 billion rials). The management of the fund is supposed to be entrusted to an investment company wholly owned by the Public Investment Fund. The purpose of the fund is to diversify the country's financial assets and improve investment risk management, as well as diversify the country's economy through the development of its financial services sector. The creation of the Sanabil al-Saudi fund was preceded by the following events (see Table 68):

The possibility of creating a sovereign wealth fund is connected with the development of the country's economy. In 2009, the Saudi Arabian economy continued to grow despite unfavorable global conditions and the financial crisis, which resulted in a significant decline in oil prices during the year. There was also a decline in prices, including a decline in the price of oil. According to OPEC, the average price of Arabian Light fell 35.2% from $94.8/bbl in 2008 (when oil prices were highest) to $61.4/bbl in 2009 (see Table 69). Saudi Arabia's average daily oil production, according to data from the Ministry of Petroleum and mineral resources, fell from 9.2 million barrels. per day in 2008 to 8.2 million barrels. per day or by 11.3%. As a result of the decline in prices and production of oil in 2009, GDP at current prices, in which the share of the oil sector is 47.7 percent, fell by 21.2% from 1.8 trillion rials in 2008. up to 1.4 trillion rials in 2009. In constant 1999 prices. GDP increased by 0.6 percent from 836.1 billion rials in 2008 to 841.2 billion rials in 2009. The state budget deficit amounted to 86.6 billion rials or 6.1% of GDP in 2009. In 2008 there was a surplus of 580.9 billion rials or 32.5% of GDP in 2008.

Table 68

Establishment of the Sanabil al-Saudia Foundation

Source: .

The current account of the balance of payments recorded an increase of 85.4 billion rials or 6.1% of GDP in 2009. The monetary aggregate M3 increased by 10.7% to 1028.9 billion rials.

Table 69

The main indicators of the development of the economy of Saudi Arabia in 2005-2009.

Index
Population, million people
GDP at current prices, billion, rials
GDP at constant 1999 prices (billion, rials)
Non-oil GDP deflator
Inflation rate (consumer prices)
Aggregate indicator of money supply M3, billion, rials
Average daily oil production, million barrels
Arabian Light average oil prices, USD
Effective exchange rate of the rial (2000=100)
Index of the ratio of currency in circulation to the total money supply
Index of the ratio of total deposits to total money supply
Net foreign assets of national banks, billion, rials
Interest rates on deposits in national currency, %, for the last 3 months
Bank capital adequacy index
Current government revenues, billion, rials
Current government spending, billion, rials
Fiscal Deficit Index / Income to GDP
Export of goods, billion, rials
Import of goods CIF, billion, rials
Index of current account surplus to GDP
Current accounts, billion, rials
Stock price index (1985=1000)

Source: .

At the end of 2009, the total share index increased by 27.5 percent over the year from 4803 in 2008 to 6121.8 in 2009. The market capitalization of shares increased from 924 billion rials in 2008 to 1195.5 billion rials in 2009 According to OPEC data, the world spot price of crude oil in 2009 decreased. The average annual price of Arabian Light oil fell from $94.77 per barrel in 2008 to to $61.18 per barrel in 2009, the average annual price of Dubai oil fell from $93.48 per barrel in 2008 to to $61.65 per barrel in 2009, the average annual price of North Sea Brent oil fell from $97.01 per barrel in 2008 to $61.5 per barrel in 2009, the average annual price of North Sea Brent oil West Texas

Intermediate dropped from $99.63/bbl in 2008 to $61.66/bbl in 2009. the average price of Arab Light oil rose from $42.9 per barrel. for the same period in 2009. up to 75.75 dollars per barrel. or by 76.6% (see Table 70), Fig. 23.

Average annual spog prices for types of oil in 1995 - 2010 US dollars per bbl.

Table 70

			North sea (Brent)
(the first

Source: .

Fig.23.Dynamics of change different varieties oil in the period from 1995 to 2010. Source: .

Real crude oil prices were declining in 2009. The average Arab Light oil price fell 36.4 percent from $16.31/bbl in 2008 to $10.38/bbl in 2009; the average North Sea Brent oil price fell 37.5 percent from $16.69 per barrel in 2008 to $10.43 per barrel in 2009 (see tab. 71). Over the past 5 years, the real price of Arab Light oil has reached its the highest level in 2008 ($16.31 per barrel). The lowest level was observed in 2005. and amounted to 9.31 dollars per barrel.

Nominal and real prices for types of oil (by 1970),

dollars / barrel

Moscow. July 7th website - The Russian Direct Investment Fund and Saudi Arabia's Public Investment Fund (PIF) are establishing a partnership under which PIF will invest $10 billion primarily in projects in Russia, RDIF said.

This is the largest commitment by a foreign investor in the history of the RDIF (the previous "record" was set by an agreement with the UAE sovereign wealth fund - for $7 billion), and one of the largest partnerships of its kind in the world, RDIF head Kirill Dmitriev told Interfax.

The priority sectors for partnership will be infrastructure, Agriculture, medicine, logistics, retail, real estate.

RDIF plans about ten projects, with potential investments of $1 billion each. The fund is going to carefully analyze possible objects for investments. Dmitriev specified that $10 billion would be invested not in a month, but in 4-5 years.

According to him, seven projects have already received preliminary approval, in total, about ten transactions may take place within the framework of partnership with PIF by the end of the year. At the same time, various mechanisms will be used that have already been tested within the framework of the Russian-Chinese investment fund and other joint RDIF platforms, including the automatic co-investment mechanism. RDIF has not yet commented on the question of whether public companies will be among the objects of investment in partnership with PIF.

Within the framework of partnership with PIF, the possibility of investments in third countries is not ruled out.

RDIF also entered into a partnership with another Saudi Arabian sovereign wealth fund, the Saudi Arabian General Investment Authority (SAGIA). The parties will conduct a joint search for investment projects on the territory of the Russian Federation. SAGIA is also responsible for attracting investments to Saudi Arabia, the fund's cooperation with RDIF will help Russian companies enter the market of the Arab state, Dmitriev said.

The successor to the Crown Prince of Saudi Arabia, Muhammad bin Salman, in St. Petersburg in June, and also participated in the meeting of the President of the Russian Federation with members of the RDIF international expert council as part of the SPIEF on June 18. "Undoubtedly, the meeting with the President greatly contributed to the decision to create a partnership," said K. Dmitriev.

RDIF already has a number of partnerships with sovereign wealth funds of Arab oil exporting countries (UAE, Kuwait, Qatar, Bahrain).

Saudi Arabia will prepare for an era of cheap oil by creating the world's largest sovereign wealth fund pooling the kingdom's assets. Its volume can be up to $2 trillion.

Prince of Saudi Arabia Mohammed bin Salman (Photo: DPA / TASS)

The Saudi Public Investment Fund (PIF) will pool $2 trillion in assets and be used by the kingdom to invest in non-primary sectors of the economy, Prince Mohammed bin Salman, son of King Salman, told Bloomberg on Friday. Now PIF assets, according to the Sovereign Fund Institute, amount to $5.3 billion.

“There is no doubt that the PIF will be the largest sovereign wealth fund in the world,” said Prince Mohammed, second in line to the Saudi throne. He chairs the Economic and Development Council, an influential economic planning body that was created after King Salman's accession to the throne in early 2015. The Board oversees the activities of the PIF.​

Currently, according to the prince, PIF already owns a stake in the National commercial bank Saudi Arabia, as well as in Saudi Arabia Basic Industries Corporation (SABIC), the world's second largest company in terms of ethylene glycol production.

Prince Mohammed clarifies that the growth of PIF assets will begin when the Saudi state oil company Saudi Aramco goes public, and its shares are transferred to the fund. According to a member of the royal family, the company's IPO could be held as early as next year, but definitely not later than 2018 - the state plans to sell less than 5% of the company. Saudi Aramco, which the Saudi authorities plan to list on the stock exchange, has the world's largest oil reserves - about 260 billion barrels. As Bloomberg notes, even if the oil price is $10 per barrel, the company's market value could be $2.5 trillion.

“Having an IPO of Aramco and transferring its shares to PIF will actually mean that the source of income for Saudi Arabia will be investments, not oil,” the king’s son said. He noted that now "it remains only to diversify investments." Bin Salman believes that the country will be able to get away from oil dependence within 20 years.

In a month, the country's authorities will publish a "State Transition Plan", which will list measures to increase the country's non-primary income, including by raising taxes. At the end of last year, Riyadh has already taken a series of steps to reduce spending and keep the budget deficit within 15% of GDP.

PIF will radically change its investment strategy. Now only 5% of the fund's assets are foreign investments, by 2020 this figure is planned to be increased to 50%, chairman of the fund's board of directors Yasser Alrumayyan told Bloomberg. According to him, PIF is now "working on several fronts - the government is transferring some of its assets, land, some companies" to us. The fund's top manager also clarified that PIF "has several projects in tourism and industries new to Saudi Arabia." He also noted that PIF's foreign investment strategy will be "very aggressive."

According to Bloomberg, the funds that the PIF promises to accumulate will be enough to "buy Apple, Google and Berkshire Hathaway." Saudi Arabia's current largest sovereign wealth fund SAMA (Saudi Arabian Monetary Agency) has assets of $632 billion, according to the Sovereign Wealth Fund Institute.

In November 2015, Reuters reported that Saudi Arabia was considering setting up a new sovereign wealth fund. The new fund, headquartered in New York, will invest in riskier assets than the kingdom's current largest sovereign fund, the Saudi Arabian Monetary Agency, which now has $632 billion in assets.

Moscow, October 14 - Vesti.Ekonomika. The Russian Direct Investment Fund (RDIF) signed a number of agreements on joint projects with Saudi Arabia.

Today was the first meeting of the Russian-Saudi Economic Council - a new body, which included leading representatives of the business circles of both countries.

The meeting was held in the presence of Russian President Vladimir Putin and Crown Prince and Minister of Defense of Saudi Arabia Mohammed bin Salman Al Saud.

Council co-chairs are CEO Russian Direct Investment Fund (RDIF, sovereign wealth fund Russian Federation) Kirill Dmitriev and Prince Abdullah bin Bandar bin Abdel Aziz, Minister of the National Guard of the Kingdom of Saudi Arabia.

The Council will play a leading role in the development of bilateral economic ties, trade and investment cooperation between Russia and Saudi Arabia in all sectors.

A number of agreements were signed during the Russian President's visit to Saudi Arabia.

A consortium of investors as part of the Russian Direct Investment Fund, the Saudi Arabian Oil Company (Saudi Aramco) and the sovereign fund of the Kingdom of Saudi Arabia Public Investment Fund (PIF) announced the approval of binding documentation for the acquisition of a 30.76% stake from the Rosnano group in the Novomet Group of Companies, one of the leading manufacturers of high-tech oil submersible equipment in Russia and the world.

RDIF and the Saudi petrochemical corporation SABIC have agreed to jointly invest in the ESN group's project to build a methanol plant in Skovorodino, Amur Region. The production capacity of the 1st stage of the enterprise will be 1 million tons of methanol per year. In July 2019, the project to create a methanol plant became a resident of the Advanced Development Area (TOR) Svobodny. As part of the ASEZ mechanisms, the state provides investors with incentive support measures.

RDIF announced cooperation with the Saudi agricultural and livestock investment company SALIC (Saudi Agricultural and Livestock Investment Company). "The partnership between RDIF and SALIC is aimed at realizing this potential by attracting investments and expertise from SALIC, as well as further strengthening comprehensive cooperation between our countries," Dmitriev said.

RDIF, PhosAgro and the Saudi diversified mining corporation Ma'aden have announced a partnership to develop investment cooperation and joint implementation of projects in the Russian Federation and the Kingdom of Saudi Arabia.