Saudis offer Russia secret oil deal if it drops Syria


Ambrose Evans-Pritchard
The Age, Tuesday, August 27, 2013


Strategic jitters have pushed Brent crude prices to a five month high of $US112 a barrel. Photo: Jessica Shapiro



Saudi Arabia has secretly offered Russia a sweeping deal to control the global oil market and safeguard Russia’s gas contracts, if the Kremlin backs away from the Assad regime in Syria.

The revelations come amid high tension in the Middle East, with US, British, and French warships poised for missile strikes against Syria, and Iran threatening to retaliate. The strategic jitters pushed Brent crude prices to a five-month high of $US112 a barrel.

‘‘We are only one incident away from a serious oil spike. The market is a lot tighter than people think,’’ said Chris Skrebowski, editor of Petroleum Review.

Leaked transcripts of a behind closed doors meeting between Russia’s Vladimir Putin and Saudi Prince Bandar bin Sultan shed an extraordinary light on the hard-nosed Realpolitik of the two sides.
 

 Prince Bandar, head of Saudi intelligence, allegedly confronted the Kremlin with a mix of inducements and threats in a bid to break the deadlock over Syria.

‘‘Let us examine how to put together a unified Russian-Saudi strategy on the subject of oil. The aim is to agree on the price of oil and production quantities that keep the price stable in global oil markets,’’ he is claimed to have said at the four-hour meeting with Mr Putin.

‘‘We understand Russia’s great interest in the oil and gas in the Mediterranean from Israel to Cyprus. And we understand the importance of the Russian gas pipeline to Europe. We are not interested in competing with that. We can cooperate in this area,’’ he said, purporting to speak with the full backing of the US.

The talks appear to offer an alliance between the OPEC cartel and Russia, which together produce more than 40 million barrels a day of oil, 45 per cent of global output. Such a move would alter the strategic landscape.

The details of the talks were leaked to the Russian press. A more detailed version has since appeared in the Lebanese newspaper As-Safir, which has Hizbollah links and is hostile to the Saudis.

As-Safir said Prince Bandar pledged to safeguard Russia’s naval base in Syria if the Assad regime is toppled, but he also hinted at Chechen terrorist attacks on Russia’s Winter Olympics in Sochi if there is no accord.

‘‘I can give you a guarantee to protect the Winter Olympics next year. The Chechen groups that threaten the security of the Games are controlled by us,’’ he allegedly said.

Prince Bandar went on to say that Chechens operating in Syria were a pressure tool that could be switched on and off.

‘‘We use them in the face of the Syrian regime but they will have no role in Syria’s political future.’’
President Putin has long been pushing for a global gas cartel, issuing the ‘‘Moscow Declaration’’ last month to ‘‘defend suppliers and resist unfair pressure’’.

Mr Skrebowski said it is unclear what the Saudis can really offer the Russians on gas, beyond using leverage over Qatar and others to cut output of liquefied natural gas.

Saudi Arabia could help boost oil prices by restricting its own supply. This would be a shot in the arm for Russia, but it would be a dangerous strategy if it pushed prices to levels that put the global economic recovery at risk. Mr Skrebowski said trouble is brewing in supply states.

‘Libya is reverting to war lordism. Nigeria is drifting into a bandit state with steady loss of output. And Iraq is going back to the sort of Sunni-Shia civil war we saw in 2006-07,’’ he said.

The Putin-Bandar meeting took place three weeks ago. Mr Putin was unmoved by the Saudi offer.
‘‘We believe that the Syrian regime is the best speaker on behalf of the Syrian people, and not those liver eaters,’’ he said, referring to footage showing a Jihadist rebel eating the heart and liver of a Syrian soldier.

Prince Bandar said that there can be ‘‘no escape from the military option’’ if Russia declines the olive branch. Events are unfolding exactly as he foretold.


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