OPEC, Russia Working on Long-Term Oil Pact: Saudi Prince

A deal between OPEC and Russia is likely to be on top of the agenda for the next OPEC meeting. (AFP)

Saudi Arabia and Russia are working on a long-term oil pact that could extend controls over world crude supplies by major exporters for up to 20 years, the Kingdom’s crown prince has said.

A current agreement between the Organization of the Oil Exporting Countries (OPEC) and other producers including Russia has led to a sustained increase in the oil price.

A longer-term pact could run for between 10 and 20 years if negotiations revealed in New York by Saudi Crown Prince Mohammed bin Salman come to a successful conclusion.

The crown prince told Reuters that the Organization of the Petroleum Exporting Countries (OPEC) and Russia — which between them produce about 40 percent of the world’s oil — were in talks about a longer-term partnership.

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“We are working to shift from a year-to-year agreement to a 10-20 year agreement. We have agreement on the big picture, but not yet on the detail,” he said.

A deal between OPEC and Russia is likely to be on top of the agenda for the next OPEC meeting, also in Vienna in June.

Since the current agreement to limit oil production, the price of crude has recovered from the declines they suffered in 2014 and 2015.

The prospect of a longer deal was received a mixed reaction at the one-day Saudi-US CEO Forum in New York. One American businessman, who does extensive business with Saudi Arabia but who did not want to be identified, said: “It might be good for Saudi Arabia and the oil price, but it is a strategic play that might not go down well with American producers. It would add a long-term geopolitical element to the oil market that maybe we (Americans) would not welcome.”

It also emerged on Tuesday that the prospectus for the planned initial public offering (IPO) of Saudi Aramco is “virtually ready,” including a revised valuation of the oil giant’s reserves.

Sources close to Aramco in New York, who declined to be identified because details of the prospectus were not in the public domain, told Arab News that the plans for an IPO were on track for later this year, and that the prospectus was awaiting government approval and some finalizing of details, like valuation and listing venue. “There are a few spaces left blank but (the prospectus) is almost ready to go,” a source said.