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RDIF head: Relations with Saudi Arabia and UAE are at an unprecedented level

In the middle of October Russian president Vladimir Putin visited the Kingdom of Saudi Arabia and the United Arab Emirates. The Russian Direct Investment Fund (RDIF) helped prepare for and actively participated in the official visit. Kirill Dmitriev, CEO of RDIF, told TASS about the prospects for Russia’s partnership with Saudi Arabia and the UAE, and agreements signed during the visit
Head of the Russian Direct Investment Fund Kirill Dmitriev  Alexei Druzhinin/Russian Presidential Press and Information Office/TASS
Head of the Russian Direct Investment Fund Kirill Dmitriev
© Alexei Druzhinin/Russian Presidential Press and Information Office/TASS

- What are the key outcomes of the president’s trip to Saudi Arabia and the UAE, and how is our partnership set to develop?

- The Russian president’s visit was a historic event. It demonstrated that cooperation between our countries is being rapidly restored and is now at an unprecedented height thanks to the efforts of President Putin, King Salman bin Abdulaziz Al Saud, and Crown Prince Mohammed bin Salman. It is clear that the last few years have seen a far-reaching transformation of our relations into a strategic partnership, which will ensure that we can preserve stability in global energy markets, thanks to the OPEC+ agreement, whilst also developing mutually-beneficial investment cooperation.

The restoration of relations with Saudi Arabia has set an example showing that, given a respectful attitude to Russia, it is possible to quickly build a productive geopolitical dialogue, one that benefits both countries. The visit to the United Arab Emirates was no less important - that country is also Russia’s key partner in the Middle East. Both visits resonated around the world, demonstrating the enhanced role that Russia plays in the region. Saudi Arabia and the United Arab Emirates are an important source of investment for the Russian economy.

The Emirates has demonstrated how a nation can successfully transform its economy, by expeditiously investing income from oil. The country is now rapidly developing, and its experience could be useful for Russia as it implements its own economic growth programs.

Both visits underscored the important role that Russia plays in solving global problems, as well as its role as a leading geopolitical player in the Middle East.

The president’s trip showcased the achievements in the relations between Russia and these two countries over the last few years and identified new goals for the future, including cooperation to implement strategic national goals such as Russia’s National Projects or Saudi Arabia’s ‘Vision 2030’.

- What is the role of RDIF in building this relationship?

- The objective that the Russian president set for the Russian Direct Investment Fund is to support this breakthrough in relations between our countries in all key areas: from the energy sector and infrastructure construction to progress in cutting-edge technologies, including for the use of artificial intelligence, and culture.

To achieve this objective, the fund’s representatives have made around 200 trips to the Kingdom of Saudi Arabia and the UAE in 2019 alone. During the official visit, RDIF announced the opening of its office in Saudi Arabia. We plan to keep up our current, intense dynamics of business activity.

As part of the visits, we have signed more than 20 agreements with our partners, worth a total of over $3.3 bln. In fact, all the agreements featuring specific values of the deals and precise investment plans were signed with the involvement of RDIF and our partners.

Interestingly, the official visit took place on the eve of Saudi Arabia’s first G20 presidency.

- During the visit, the Russia-Saudi Economic Council sat in its inaugural session. Please tell us about the role of that new organization, and its plans for the future.

- The Council will play a key role in the development and coordination of bilateral economic ties, as well as trade and investment cooperation between Russia and Saudi Arabia across all sectors.

The Saudi co-chair is Minister of the Saudi National Guard Prince Abdullah bin Bandar, one of the most influential people in the Kingdom. The Council’s first session was held in the presence of President Vladimir Putin and Crown Prince Mohammed bin Salman.

Our Saudi partners have always emphasized to us the importance of regular, direct contact between business leaders, and the need to establish an organization that functions on a permanent basis.

Russian companies spoke about how difficult it was for them to enter Saudi markets and become the suppliers for the Saudi partners. Historically companies from the USA and Europe have dominated this market, while Russian companies have had a hard time doing business there.

The Council also included the heads of some of the biggest companies in both countries. This meant that it has already become the main forum for business cooperation. We expect the Council to become a catalyst for new breakthroughs, helping Russian companies feel just as much at home in the Saudi market as American and European companies have.

The Council will focus on large-scale joint projects, including the localization of production in Saudi Arabia and support for Russian companies entering the country’s market. We are very grateful to the leaders of our countries for the support that they have provided to the Council.

- What agreements were signed during the official visit to Saudi Arabia?

- During the visit, RDIF announced more than 10 agreements worth a total of $2 bln in the oil and gas, agriculture, transport, mining and other sectors.

We announced a partnership with SALIC, the Saudi Agricultural and Livestock Investment Company. This company is a global investor into agricultural assets, and we are already discussing joint investments into Russian agriculture companies. Following the visit, cooperation in agriculture may now benefit from new momentum — on the request of the Russian President and as a result of intense work by Agriculture Minister Dmitriy Patrushev, an embargo on imports of Russian wheat was lifted.

Jointly with one of the largest petrochemical companies in the world, SABIC, and the Russian company ESN, we agreed to construct and operate a methanol plant with an annual production capacity of up to two million tonnes, in the Amur Region in the Russian Far East. We are also planning a number of other projects in Russia, jointly with SABIC.

The partnership between Russia’s PhosAgro and Saudi Arabia’s Ma’aden, two of the world’s leading fertilizer producers, will see the production of environmentally friendly, non-toxic phosphate fertilizers. Russia and Saudi Arabia are among the few countries to supply eco-friendly fertilizers, which makes our cooperation in the green economy exceptionally promising.

Through collaboration between the Russian Railways and the Saudi Railway Company Russia will take part in ambitious projects to construct new railroads in Saudi Arabia, supporting Riyadh in meeting the goals set by the Vision 2030 Program.

RDIF, Saudi Aramco and PIF are expected to complete the acquisition of a stake in Novomet, the leading manufacturer of oil-submersible equipment, once the deal isapproved by the Federal Antimonopoly Service. This will be the first investment by Saudi Aramco in Russia, which will lay the groundwork for other investments by the company in the Russian economy. Novomet has already become the official supplier of Saudi Arabia’s oil giant.

- Overall, how do you see the future cooperation with Saudi Aramco?

- During the recent attacks on its infrastructure, Saudi Aramco demonstrated that it is a reliable company. Undoubtedly it is a player of strategic significance in the global oil market and we see a strong interest in Aramco from a large number of investors.

- Can you tell us about the partnership between RDIF and the Saudi Arabia Public Investment Fund (PIF)?

- PIF is the main mechanism for implementing the Kingdom’s national strategy ‘Vision 2030’, and, being one of the world’s largest investors, it is a reliable partner for RDIF in the region.

Until very recently, PIF had no projects in Russia – its first investment in our country was made in collaboration with RDIF. In just a short time, RDIF and PIF managed to build strong, trust-based relations from scratch, and on a mutually-beneficial basis.

RDIF and PIF have already jointly invested more than $2.5 bln into over 30 projects. These are the Zapsibneftekhim project, one of the world’s largest petrochemical complexes, investments in hydropower stations in Karelia, in St. Petersburg Pulkovo airport and a high-speed tram line as well as in other projects in infrastructure, logistics, construction, manufacturing, retail and technologies.

The joint investment portfolio of PIF and RDIF has been performing well, generating attractive returns. Together with our Saudi colleagues, we are working on more than 25 new projects worth a total of $10 bln across sectors, including agriculture, technologies, artificial intelligence. We also invest in projects to develop Russia’s Far East.

- What are your further plans for cooperation with partners from Saudi Arabia?

- Right now, it is very important to keep the positive momentum that the recent official visit has granted to our relations, and continue to develop mutually-beneficial cooperation. We believe that the implementation of national projects in Russia will create excellent opportunities for investments into a portfolio of projects worth more than $200 bln, in a number of different sectors.

The president has entitled RDIF to play a role of an effective filter for selecting, structuring and implementing national projects, and we are constantly offering our Saudi partners interesting projects with attractive yields.

The Russian national development goals are in many ways similar to the ones set by Saudi Arabia’s strategic program ‘Vision 2030.’

The joint implementation of these programs will make it possible to support economic growth and transformation of the two national economies. Our work with Saudi market leaders will ensure not only investment flow into the Russian economy, but will also see an exchange of experience and expertise.

In our work with our Saudi partners, we have a particular focus on high technologies, including Artificial intelligence. RDIF is actively cooperating with PIF in this area, too. We are also actively working on a number of petrochemical and gas chemical projects.

- How does RDIF plan to support Russian companies that want to operate in Saudi Arabia and other countries of the region?

- Supporting Russian companies in entering international markets is one of RDIF’s central objectives. Currently, more than 10 companies from Russia are planning to execute projects in this country, with our assistance.

Alongside Sibur, Saudi Aramco, Total and Sinopec, we are developing plans to build an immense oil refinery in the Al Jubail industrial park. The Saudi side is offering attractive crude supply terms, and we are now working through the details to optimize the capital costs of the project.

We are discussing with our partners the potential transfer of a technology developed by Transneft to the Saudi Arabian market, the construction of water-treatment infrastructure in Riyadh and Jeddah, joint projects between the Russian Railways and the Saudi Railway Company to build railroads, and the construction of a plant to produce an advanced analogue of insulin.

RDIF is also planning to introduce a Russian company, a leader in facial recognition, which uses AI and neural networks, into the Saudi market.

- How would you describe cooperation with the UAE and the Mubadala sovereign fund?

- RDIF has been actively working with the UAE for more than five years, this collaboration makes a major contribution to developing relations between the two countries. The Mubadala sovereign fund has been our key partner since 2013. Our joint fund, worth $7 bln, has become the largest source of investments from the UAE into the Russian economy.

Together, we have already implemented or approved investments into more than 45 projects totaling more than $2 bln, in a very broad range of sectors: infrastructure, technologies, financial services, mining and processing, manufacturing, telecom, retail, petrochemicals, logistics, energy and much more.

Mubadala continued to invest in 2014, which was a difficult year for the Russian economy. The fund invested into two projects of great importance to Russia: a project to eliminate ‘digital inequality’ and a project to reduce electricity losses using smart metering systems installed by Rosseti company.

Mubadala is actively investing in the development of the Russian infrastructure, which includes participation in projects to build the third and fourth sections of the Central Ring Road, TsKAD.

A joint project with Mubadala Petroleum and Gazprom Neft will enable the efficient development of oil fields in the Tomsk and Omsk regions of Russia.

We are interested in high-technology projects with a specific focus on artificial intelligence. A special technology platform has already been launched with Mubadala. The first deal of this platform is investment into Deliver, Russian online transportation platform which provides services for logistics in Russia and Europe.

Together with investors from the UAE, we are also integrating AI technologies within a whole range of portfolio companies. For example the automated x-ray analysis helps to early diagnose cancer in Oncology Centers in the Moscow region, while in ‘Mother and child’ clinics such technologies have helped to reduce the number of clinical errors six-fold .

During his visit to the UAE, the Russian president, together with Crown Prince of Abu Dhabi, Mohammed bin Zayed al Nahyan, visited a joint exhibition which showcased RDIF and Mubadala’s investment cooperation. During subsequent talks they were very appreciative of the results of our partnership.

- What investment agreements were signed with the UAE during the visit?

- Over the course of the visit, we signed more than 10 investment agreements with our partners, worth over $1.3 bln and in such sectors as the development of artificial intelligence, healthcare, transport, logistics, mining and manufacturing.

RDIF and Mubadala agreed to cooperate on national projects and joint investment into artificial intelligence. Both funds will jointly implement investment projects across sectors critically important for strategic national development up until 2024.

Our partnership in the healthcare sector will involve the exchange of cutting-edge experience and treatment technologies.

Together with Mubadala, we will be investing in the construction of a cellulose-producing plant, to be opened by one of the leading Russian wood processing companies, Sveza, as a part of the national project to support exports. This is a record-breaking deal for the sector, and the plant will become the first in Russia, both in terms of export potential and the use of green technology. The total investment into the project will be around $2.8 bln. The planned capacity of the plant, intended to supply Russia and key markets in Europe and Asia, is more than 1.3 million tons of commercial cellulose annually. This will be an environmentally-friendly, highly-efficient, next-generation facility that will become a leader in Russia’s woodworking market, creating new jobs in Vologda region.

We agreed the main terms for partnership with NtechLab, Russia’s leading developer of facial recognition technology and a global leader using artificial intelligence and neural networks.

NtechLab’s technology has been widely used, including during the 2018 World Football Cup in Russia to provide the security for the supporters. As in Saudi Arabia, RDIF and Mubadala will support the growth of business for companies on Middle East markets.

We also reached agreement with Mubadala supporting the increasing of investment into PLT, the logistics platform, for the construction of new warehouse facilities. This company, created from scratch, has already become a leader in its sector, and we are now considering other opportunities for future expansion.

Investment will focus on constructing a new distribution center in the Moscow region, with a total area of 100,000 square meters. Together with Lukoil, Russia’s globally leading oil and gas company, and the UAE’s leading oil company, ADNOC, we signed an agreement to jointly develop Gasha, the largest gas field on the Persian Gulf shelf. This will be the first major project for the Russian oil company in the UAE.

- RDIF has recently been actively developing cultural cooperation. What successes have there been during the visit, and how does the development of cultural links help the fund do its job?

- Russia and Saudi Arabia have achieved major breakthroughs in terms of cultural cooperation in recent years. With support from RDIF, a number of landmark events took place in Saudi Arabia involving leading Russian cultural figures, including a concert by the Mariinsky Theater orchestra.

As a part of the visit, RDIF and the Saudi Arabian Ministry of Culture organized an unprecedented cultural program that included a concert by Russian opera stars Aida Garifullina and Ildar Abdrazakov, accompanied by the Chaikovsky Symphony Orchestra.

The State Russian Museum presented the exhibition ‘Kandinsky and Russia,’ which was the largest ever exhibition in the Middle East of works by the founder of abstract art.

Karo, the Russian network of cinema theaters, a portfolio company of RDIF, presented for the first time the best Russian-made films to Saudi audiences, as part of a week of Russian cinema. After a long lull, the cinema industry in Saudi Arabia is experiencing a renaissance, as the country’s first cinema theater was opened last year. We were pleasantly surprised by the popularity of Soviet and Russian films.

Andrei Tarkovsky’s film Mirror was watched by a full house, while Saudi cinema-lovers asked for some films to be shown twice.

Culture plays a significant role in the process of transformation that is currently taking place in Saudi Arabia. We can see immense interest in Russian culture in Saudi Arabia, a country that is actively opening up to the outside world, and we will be helping leading Russian museums, musicians and theaters, as well as companies in the sector, to take center stage in the country’s fast-developing cultural life.

RDIF sees the development of cultural dialogue between the two countries as one of the most important long-term objectives of the fund. Such a dialogue will help build bridges between our peoples and create an atmosphere of trust, one that is vital for successful trade and investments.

Sometimes, a negative news environment will frequently prompt us to forget that, despite the differences between our cultures, we have very similar values. For example, the well-being of our families is very important to us, as is good education for our children. Cultural exchanges facilitate the mutual understanding of shared values and make cooperation between countries more sustainable and resilient.