St. Petersburg International Forum: Story of Great Success
Pyotr ISKENDEROV | 28.06.2015 | OPINION

St. Petersburg International Forum: Story of Great Success

The 2015 International Economic Forum (SPIEF) has gone down in history as an unprecedented success story. A total of 205 contracts estimated at $5.4 billion (293.4 billion rubles at current exchange rates) were signed at the annual forum said Anton Kobyakov, the executive secretary of this year’s SPIEF organizing committee. The figure does not include agreements kept away from public as commercial secrets. The event was attended by the delegations from 120 countries.

The level of representation was high. No matter the United States and the European Union have been instigating tensions by driving anti-Russia sentiments recently, big business expressed its desire to develop the relationship with Moscow. The list of guests included: BP, Royal Dutch Shell, Total, Enel, Eni, Pirelli, Lloyds. Jack Ma, the founder of Chinese Alibaba, a Chinese e-commerce giant that provides consumer-to-consumer, business-to-consumer sales services via web portals. The Chinese businessman said this was propitious for making investments into Russian economy. According to Asia Times, the Russia-China cooperation agreements stole the show. The parties signed deals totaling $1 billion. 

The cooperation with other countries will also expand. Addressing the forum, Russian President Vladimir Putin said new initiatives will be launched to improve the country’s investment climate. He announced the decision to introduce tax breaks for greenfield projects. According to the President, «We are responding to the restrictions imposed from outside not by closing off our economy, but by expanding freedom and making Russia more open. This is not a slogan; this is the substance of our actual policies and of the work that we are doing today to improve the business environment, find new partners, open up new markets, and take part in big integration projects».

Russian President Vladimir Putin met Saudi Arabian deputy crown prince and Defense Minister Prince Mohammad bin Salman King Salman. It was a real diplomatic breakthrough. «I have the honor to pass on an invitation to visit the kingdom of Saudi Arabia, as we regard Russia as one of the important states in the contemporary world, and our relations have roots in the past», Prince Mohammed said, adding that Russia had been the first country to officially recognize the Gulf kingdom. «We will aim to develop bilateral relations in all sectors», he added. 

Minister of Petroleum and Mineral Resources of the Kingdom of Saudi Arabia Ali bin Ibrahim Al-Naimi and the Russian Energy Minister Alexander Novak co-signed an executive program for implementation of the petroleum cooperation agreement between the Kingdom of Saudi Arabia and the Russian Federation. Addressing the signing ceremony, Al-Naimi said the program will raise the level of cooperation between the two countries bilaterally or with respect to the international oil market, pointing out that it will also work to push this cooperation and coordination to a new stage, both at the bilateral level between the two countries or at the international level and ensures its continuity at all levels. ‘This, in turn. will lead to creating petroleum alliance between the two countries for the benefit of the international oil market as well as producing countries and stabilizing and improving the market’, he said.

The European Union and the United States were sent a clear message – the Russia-Saudi rapprochement may lead to energy prices hikes in Europe at the time of shale production slump in the USA. The Saudi Minister said that coordinating activities between the two states could benefit the world oil market and oil producers.

According to Haber7 (19.06), the Russia’s rapprochement with Saudi Arabia is an unexpected development.

The situation on world market makes the parties get closer. The OPEC forecast released in December 2014 indicated less global oil demand in 2015. According to OPEC report, in 2014 world prices fell down to 10-year low. It dropped to 41, 8% from 43, 3% in 2013. For the first time since 2010 the cartel’s income fell below $1 trillion. According to Bloomberg, OPEC members found it difficult to balance the budgets.

Russia and China are also getting closer. In May 2015 Russia has become Beijing’s top crude supplier for the first time since October 2005. In April, imports of Saudi oil to the China reached its highest level since June 2013 at 5.26 million tons. In May Russia surpassed Saudi Arabia to become China’s top crude supplier as the fight for market share in the world’s second-largest oil consumer intensifies. China imported a record 3.92 million metric tons from its northern neighbor in May, according to data emailed by the Beijing-based General Administration of Customs on June 23. That’s equivalent to 927,000 barrels a day, a 20 percent increase from the previous month. Saudi sales slumped 42 percent from April to 3.05 million tons, Bloomberg reported.

«Following Russia’s recent acceptance of the renminbi as payments for oil, we expect more record high oil imports ahead to China», Gordon Kwan, the Hong Kong-based head of regional oil and gas research at Nomura Holdings Inc., said in an e-mail, referring to the Chinese currency. «If Saudi Arabia wants to recapture its number one ranking, it needs to accept the renminbi for oil payments instead of just the dollar».

The situation in Yemen goes on deteriorating. Under the circumstances the Kingdom is expected to continue boosting ties with Moscow, including military cooperation. The Saudi delegation included deputy head of the Saudi Arabian Navy, Admiral Ibrahim Nasir. Visiting the Army-2015 International Military and Technical Forum outside Moscow (Kubinka) he said that his country is interested in Russian ships, particularly the new Steregushchy-class corvette. «Yes, we are interested, that's why we are here, and we are not only talking about the navy. We are interested in frigates, corvettes and guard ships. It's too early to compare prices, evaluate logistic and then we can make actual decisions», the Admiral said.  The Saudi team also showed interest in purchasing Russia’s Iskander tactical ballistic missile systems, a source in the country’s delegation at the Army-2015 International Military and Technical Forum outside Moscow said on June 16. «We are interested in buying Iskanders. A high-ranking delegation has arrived here to discuss this», he told.

Saudi Arabia signed six agreements with Russia including the peaceful use of nuclear technology, Al Arabiya News Channel reported on June 18. This autumn Saudi Arabia’s King Salman is expected to pay an official visit to Russia. Energy, military and nuclear cooperation will hit the agenda. Saudi sources say Russia may build nuclear power stations in Saudi Arabia.

Multi-billion deals signed, the cooperation with China receiving a new impetus, the presence of Western big business sharks paying interest in dealing with Russia and launching a dialogue on energy and military cooperation with Saudi Arabia – these are the results of St. Petersburg’s International Economic Forum. Not a bad outcome for a country that the United States and the European Union are trying to isolate!

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