Russia, US Agree to Work Toward Restoring Ties
As the first talks between high-level delegations from Russia and the US got under way in the Saudi capital Riyadh Tuesday, energy quickly made it on the agenda — in terms of sanctions, attacks on oil infrastructure and prospects for future cooperation and investment.
Both sides described the talks, targeted at ending the war in Ukraine and normalizing relations, as useful, serious and laying the foundation for further dialogue.
They agreed to take steps to normalize the operation of their respective diplomatic missions and "lay the groundwork for future cooperation on matters of mutual geopolitical interest and historic economic and investment opportunities," the US State Department said, which was confirmed by Russian Foreign Minister Sergei Lavrov.
Such cooperation "will emerge from a successful end to the conflict in Ukraine," the department added.
"One phone call followed by one meeting is not sufficient to establish enduring peace. We must take action, and today, we took an important step forward," State Department spokesperson Tammy Bruce said after the meeting.
Washington and Moscow will now appoint high-level teams to start working toward ending the war in Ukraine, both sides said.
Sanctions, Drone Attacks
US Secretary of State Marco Rubio reiterated after the meeting that the talks were not yet at a level that would involve discussing any lifting of sanctions. But in comments to the media, he indicated that there would need to be “concessions” — and that Europe would have to be part of the process because of its own sanctions on Russia.
The EU has imposed multiple layers of sanctions on Russia since its February 2022 invasion of Ukraine, including import embargoes on Russian crude and products in late 2022 and early 2023.
“There are sanctions that were imposed as a result of this conflict. And so … in order to bring an end to any conflict, there has to be concessions made by all sides,” Rubio said. “We’re not going to predetermine what those are.”
He added, “There are other parties that have sanctions. The European Union is going to have to be at the table at some point because they have sanctions as well that have been imposed.”
Russia’s Lavrov also told a press conference that the US delegation had raised the issue of attacks against energy infrastructure in the conflict and proposed a ban on such attacks.
Lavrov insisted that Russia had only targeted energy infrastructure that directly services Ukraine's military forces rather than civilian facilities.
Answering a question on Ukraine's drone attack Monday on the main export route for Kazakh crude to global markets, Lavrov said it should persuade everyone that President Volodymyr Zelenskiy and his team "should be slapped at their hands."
The Caspian Pipeline Consortium (CPC) operates the pipeline, which runs from the Chevron-operated Tengiz field in Kazakhstan to a terminal near the Russian Black Sea port of Novorossiysk.
There was uncertainty Tuesday about the impact of the attack.
Russian national pipeline operator Transneft, a shareholder in CPC, said Tuesday that exports of Kazakh crude via the line could fall by around 30%. Repairs to the damaged Kropotkinskaya pumping station, located in southern Russia along the pipeline route, could take up to two months, Transneft said.
A “temporary emergency configuration” allowed oil to keep flowing by “bypassing the pump station,” Transneft said.
Russian Deputy Prime Minister Alexander Novak reported to President Vladimir Putin on Tuesday that exports via CPC could drop by 30%-40%.
However, a day earlier, Chevron and the Kazakh energy ministry had said separately that crude from the country continued to flow via CPC without any restrictions.
CPC said Tuesday that, “At the moment, crude oil from shippers is being accepted according to the specified pumping technical capacities.”
The pipeline transported 63 million tons (1.3 million barrels per day) last year, according to CPC. It has a nameplate capacity of around 1.5 million b/d.
Economic Ties
Economic issues were also on the US-Russia agenda with negotiations led by Kirill Dmitriev, head of the Russian Direct Investment Fund.
Ukrainian-born Dmitriev reportedly told journalists in Riyadh that Russian representatives had handed the US delegation some proposals on economic and trade cooperation, without providing details.
Arctic projects were mentioned as one possible area of cooperation.
Dmitriev argued it was important to start a dialogue and to admit that "sanctions hit American companies more than they hit Russia," estimating US companies’ losses at around $300 billion.
US-educated Dmitriev played a role in negotiations between Russia and Saudi Arabia in 2020 on ending their oil price war and agreeing the historic Opec-plus production-cut deal after the Covid-19 pandemic outbreak. US President Donald Trump also played a mediator role during his first term in office.
"We will start with this and gradually move further to other spheres," Dmitriev noted, adding that he expected progress on "the economic track" could be reached within two to three months.
Possible Comeback?
US-sanctioned LNG projects and possible gas supplies via the damaged Nord Stream 2 pipeline connecting Russia and Europe under the Baltic Sea were not discussed in Riyadh, according to Dmitriev.
But he said he believed that the US oil majors would return to Russia. "We believe at some point they will be coming back because why would they forego these opportunities that Russia gave them to have access to Russian natural resources?" he told the New York Times.
International oil majors, including Exxon Mobil, left Russia in 2022 following its invasion of Ukraine. Exxon held a 30% stake in the Sakhalin-1 production-sharing agreement venture on the Russian Pacific shelf.
Moscow set up a new operating company for the project in October 2022 to replace the Exxon-led Exxon Neftegaz consortium, and the US major declined to take a 30% stake in the new company. Late last year, Moscow delayed the deadline for the sale of Exxon’s stake.