Russia and Saudi Arabia plan to set up a US$1 billion energy fund as the world's two biggest oil producers seek to cement a partnership that was bolstered by their brokering of a global oil output cut.
The agreement to establish the fund is expected to be among a number of agreements that will be signed between the two countries during King Salman's state visit to Russia this week, Russian energy minister Alexander Novak told the Dubai-based Al Arabiya news channel.
"With regards to the energy fund, there is in fact a decision [to set it up] and during the king's visit to Russia the decision will be made," said Mr Novak in a transcript of the interview published on the channel's website.
"In principle, the talk revolves around earmarking $1bn just for energy projects and I as an energy minister am pleased by this because we are focusing on developing our cooperation not just within the framework of Opec or even outside Opec, but also developing cooperation in the fields of oil, gas, power and renewable energy."
Russia and Saudi Arabia are leading efforts to trim global oil production by 1.8 million barrels of oil per day through a six-month agreement that ended in June and which was extended to the end of next March to help prop up oil prices and reduce the glut in the market.
"The Saudi Russian fund seeks to open up the north-south energy relationship with investment in projects that helps co-ordinate the future of energy markets," said Theodore Karasik, senior adviser at Washington, DC-based geopolitical risk consulting firm Gulf State Analytics.
"In addition, the move opens new avenues of cooperation between Russia and Mena."
Mr Novak said a number of Russian companies are exploring various aspects of cooperation with Saudi Arabia.
Gazprom Neft, the oil arm of Russian gas giant Gazprom, and other companies are expected to sign agreements with their Saudi counterparts, Mr Novak said.
Russian energy companies are also exploring the possibility of working with Saudi Aramco, the world's biggest oil producer, in the oil services field in the kingdom. Russian companies and in particular Rosneft, the country's biggest oil producer, are also interested in oil trading co-operation.
Novatek, Russia's largest non-state gas producer, and Saudi Arabia are also discussing cooperation in gas production in Russia, the minister said. Russia sits on the world's second-largest gas reserves after Iran, according to BP statistics.
"Natural gas is likely to be the main focus with Russian energy companies and their subsidiaries operating in the kingdom," said Mr Karasik.
Russia is also interested in partaking in Saudi Arabia's renewable energy projects, the minister said.
The kingdom plans to generate 9.5 gigawatts of electricity from renewable sources, mainly solar and wind, by 2023 at a cost of up to $50bn.
The energy fund is not the first effort at a partnership between the two countries
In 2015, the Public Investment Fund and the Russian Direct Investment Fund, the two countries' sovereign wealth funds, signed a memorandum of understanding to co-invest as much as $10bn.
The agreement was signed during then-deputy crown prince Mohamed bin Salman's visit to Russia. The two sides also agreed to cooperate in the field of nuclear energy.