Saudi Energy Minister Khalid Al-Falih’s latest visit to Central Asia is seen as part of the Kingdom’s efforts to gain consensus for the extension of the production cut agreement between OPEC and non-member countries ahead of the upcoming May 25 meeting in Vienna, analysts told Argaam.
While the latest talks included plans to strengthen economic ties with Asian countries as the Kingdom drums up investments for its ambitious economic reform plan, Vision 2030, Al-Falih strategically focused on energy and security issues this time around.
After visiting Turkmenistan, Azerbaijan, and Kazakhstan this past weekend, the Saudi energy minister said that there's an understanding between the Kingdom and Central Asian countries over oil markets and the need to stick to production cuts.
The minister's talks in Turkmenistan and Kazakhstan in particular are seen to be significant on both the security and energy fronts for several reasons: Turkmenistan, which has a beleaguered economy, holds the world’s fourth-largest gas reserves after Iran, Russia, and Qatar— and is also a neighboring country to Iran. Kazakhstan, on the other hand, has proven to be a key partner for Saudi Arabia since it has helped provide assistance for peace talks on Syria in the past.
Geopolitical Influence
Last December, Russia, Kazakhstan, and Azerbaijan were among non-OPEC countries that had agreed to cut oil production, while Turkmenistan officially declined to take part in both the talks and the cut.
After meeting with Turkmenistan's president Gurbanguly Berdimuhamedow, Al-Falih said the president was "thankful" for Saudi Arabia's attentiveness and interest to deepen ties with his country.
“Russia's interest in Saudi activity in Central Asia is positive,” said Theodore Karasik, Senior Adviser at Gulf State Analytics in Washington, DC. “Clearly, Al-Falih's travels to Central Asia represent strategic thinking and planning by Riyadh that curries a positive attitude in the Kremlin.”
The Saudi oil minister’s visit to Central Asia is also said to be sending another direct message to Russia.
“These countries shadow Russia in terms of place on the totem pole, yet are predominantly Muslim nations,” said Samir Madani, a Sweden-based entrepreneur who trades oil and Co-Founder of TankerTrackers.com. “Saudi is building alliances wherever it can, and in various sectors. For Russia, this means that Saudi is in its backyard, just as Russia is in Saudi's backyard.”
In Kazakhstan on Saturday, Al-Falih met with his counterpart Kanat Bozumbayev, as well as Prime Minister Bakytzhan Sagintayev. The Saudi minister on his official Twitter account said that an agreement had been reached to strengthen economic cooperation and boost direct investments in the areas of energy, industry, and natural resources.
“Al-Falih's visit to Kazakhstan is important for the upcoming OPEC meeting but also the future of Kazakhstan's oil industry,” said Karasik. “With Saudi Vision 2030, Al-Falih and his coterie see investment strategies with Kazakhstan as a medium to long-term project; especially given Kazakhstan nexus between China and Europe plus Russia.”
OPEC’s Bid to Extend Cuts
Earlier this month at an energy conference in Abu Dhabi, Al-Falih said the oil production cut deal is likely to be extended and that a preliminary agreement that did not yet include all oil ministers had been reached. He also stressed that cutting back on oil stocks was a top priority.
OPEC ministers are scheduled to meet on May 25 to decide whether or not the deal will be extended for another six months.
“Saudi Arabia is keen to have the cuts extended but wants the burden to be shared as broadly as possible,” said Graham Griffiths, analyst at consultancy Control Risks in Dubai. “Engaging in these visits now builds momentum ahead of the OPEC meeting and will strengthen the Saudis’ position in discussing how cuts are to be distributed.”
This time around, it remains unclear whether Iran will join the agreement after being exempt during the first round of production cuts in order to regain its oil market share.
However, the Iranian petroleum minister said on Saturday that Tehran would agree to extend the agreement, if other parties to the deal also agreed to do so.
"If all OPEC members or a majority of OPEC members support this position, we will support this issue and we would go along other countries and members," Zangeneh was quoted as saying by the Iranian Shana news agency.
Write to Reem Abdellatif at reem.a@argaam.com
Comments
{{DisplayName}}
{{ElapsedTime}}