Vladimir Putin's two-day visit to Saudi Arabia, which has substantial clout in Islamic countries, is significant because it is the first visit by a Russian leader to the Arab nation, considering the two countries maintained no diplomatic relations for some 60 years.
"On the face of it, ... it seems that we are rivals, but considering the world's growing demand for energy, that is not so," Putin said at a meeting with Russian and Saudi businessmen.
"Russia and Saudi Arabia are the world's leading energy producers and exporters, and here it is easy for us to find common ground," the Russian leader said, adding that two Russian energy companies, privately owned LUKoil [RTS: LKOH] and Stroitransgaz - a construction arm of energy giant Gazprom, were already operating on the Saudi market.
In January 2004, LUKoil, Russia's top private crude producer, won a tender to develop the 11,200-square-mile "Zone A" natural gas field in the Rub el Hali desert south of Al-Ghawar in Saudi Arabia, and signed a 40-year contract with the Saudi government to explore and develop the vast field.
LUKoil said the joint venture, LUKoil Saudi Arabia Energy Ltd. (Luksar), had found hydrocarbon accumulations at a gas deposit on the Tukhman structure, Contract area "Zone A". LUKoil Overseas holds an 80% stake in Luksar, with 20% belonging to Saudi major Aramco.
"LUKoil also plans to invest more than $2 billion in new gas fields," Putin said, adding that the two countries could also develop cooperation in other areas - namely in metals, nuclear power, high technologies, and transportation infrastructure.
The Moscow visit by then- Prince Abdullah in September 2003 yielded a series of other bilateral business deals. Gazprom's Stroitransgaz, which was the first Russian company to establish contacts with the state oil company Saudi Aramco and become its official contractor, agreed with Saudi Oger construction company to establish the first Russo-Saudi consortium.
Russia's AFK Sistema [RTS: AFKS] and Saudi Jeraisy Group signed an agreement to sell and produce plastic cards, invest in real estate, engage in marketing, sales and servicing of Russian helicopters and cooperate on international stock markets.
Russian Railways monopoly is also bidding to build the longest Middle East railway through Saudi Arabia, and Russia's military exporter hopes to sign deals on Russian tank supplies to the Arab nation.
Putin invited Saudi bankers to open subsidiaries in Russia and welcomed Saudi businessmen's proposal to establish a Saudi-Russian bank to promote bilateral investment and regulate financial flows.
"It is a good plan. There are no impediments to the creation of a Russian-Saudi bank," Putin said, adding that "Saudi financial institutions could also open subsidiary banks in Russia."
Putin called on Saudi business to invest more in the Russian economy.
"We are interested in an inflow of investment from Saudi Arabia and are ready to consider concrete proposals in this sphere," he said, adding that the Russian market offered "vast opportunities."