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CNBC Interview with Russia’s Energy Minister Alexander Novak from the World Economic Forum 2018

Following are excerpts from a CNBC interview with Alexander Novak, Russia's Energy Minister and CNBC's Steve Sedgwick from the World Economic Forum 2018.

SS: Minister, very nice to see you again. We only saw each other a couple of months ago but it's very interesting to see you in this context here in Davos. I'm interested, there is an air of optimism in the global economy, there is an air of optimism in Davos. Do you have concerns that that is complacent or do you share that optimism?

AN: Well, firstly I have to say that this is the first time that I've been here at Davos. And of course this is a very good forum, in my opinion, to discuss subjects like the development of the global economy and global problems. And in theory that is indeed what is going on here. I see that there is a very respectable line up of participants and the discussions taking place here are very serious. I don't know what the mood was here on previous occasions because I wasn't here. But I think today that many are looking with greater optimism at the processes going on in various economies, the figures for 2017 in terms of the growth of the global economy were higher per country than were forecast. And everyone is looking with a great deal of optimism to the middle term. What's important to me, is that energy is also being discussed here. Questions of development in global energy, the challenges facing energy and changes, and also many are also interested in the cooperation taking place between OPEC and non-OPEC countries to balance the market. This means that these actions are having a positive effect on the Russian and global economy.

SS: I spoke to his Excellency the Saudi oil minister yesterday. And I said to him how I thought the relationship between you and him personally and indeed between Russia and Saudi looked like it was growing beyond the OPEC-NON-OPEC agreement. Would you agree that something longer term is happening in the relationship between Russia and Saudi Arabia?

AN: I fully agree with my colleague. I have the same feelings and they are based on the fact that firstly we have fairly frequent and positive contact at the highest level. We only have to recall King bin Salmon's visit to Moscow in October last year. In addition, we are working together with our investment funds, implementing joint projects. We have now initiated over 30 projects with our Saudi colleagues in the field of energy. We have our agenda, a road map, agriculture, industry, business circles, business, we are working actively together in practically every field.

SS: In terms of moving that beyond energy and beyond various economic sectors, do you see something more meaningful happening on a political front as well. Perhaps a new cooperation at the highest political level, which will have a geopolitical impact in areas where historically Russia and Saudi Arabia have been on the opposite side on some of the conflicts in that region?

AN: I think that without a doubt this factor will be of great significance now. Economics has always had a fundamental influence and also on political cooperation. Therefore, of course, we are concentrating on the development of economic and trading collaboration and the development of our political relations as well.

SS: Although that's very positive for the Russia-Saudi Arabia relationship. Does that have ramifications for other major powers, international powers and regional powers in the Middle East? For instance, does it have ramifications for the relationship between the United States and yourselves and with Saudi Arabia? And the relationship between Russia and Saudi Arabia and Iran as well?

AN: Well, as far as the development of economic and trading relations is concerned, we are prepared to work with everyone in all areas. We have not moved away from our proposals for dialogue with the United States and with the European Union and for us it's important to develop our collaboration in energy, to be in competition, to jointly create new technologies in order to meet an increasingly growing demand for energy in the world.

SS: How does the US and Russia resolve its differences and we reach an end on the current impasse on sanctions? How does that relationship transform with Russia and the EU as well?

AN: Well, firstly we need to stop trying to seeing enemies in each other, to stop seeing apparent dirty tricks on the part of our partners in all spheres. I think we need to pay more attention to what business is saying. And business is saying that we want to work, collaborate and develop joint projects with Russian companies because today these are two large powers and only by cooperating together can we develop and ensure technological progress and resolve the global problems that incidentally are also being discussed here at Davos.

SS: Will you get a chance to speak to the US officials directly here in Davos to discuss this and try to actually get the relationship moving forward?

AN: For our part, we are ready and we were ready back in March when we were in Houston... to hold the relevant negotiations or to meet to discuss the current situation to develop our cooperation in the energy field. And we will be ready here in Davos to undertake this sort of consultation.

SS: Your message seems very much that we are working with the international community, certainly in the energy sphere and other spheres as well. Certainly, obviously with your cooperation with Saudi Arabia. Do you think the American message that we understand is going to come from Mr Trump about 'America First' sits at odds with a more collegiate attitude?

AN: Well, from the point of view of solving the global challenges that face our world, it is fairly fragile and requires a coordination of action, a joint resolution of issues. Of course it's important not to isolate yourself up and undoubtedly not to be protectionist. We need to work together to develop competition and to work out joint solutions. Indeed, there is already very good forum to do this and that is the G20, within the framework of which all the questions of cooperation can be discussed.

SS: If I may go back to some very specific issues in your arena as well. In terms of the OPEC deal, I see reports that you are willing to look at an extension of the current cuts beyond 2018. Is that accurate? That you see the current cuts that the OPEC and Non-OPEC groupings have made going beyond the end of 2018?

AN: Well, firstly, these discussions about the need and expediency to have an extension beyond 2018 haven't taken place. Our main consultations at the moment concern what final results we need to achieve in order to balance the market. And according to the OPEC secretariat's estimates, this needs to continue until the end of 2018. Of course, if this doesn't come to pass and, of course, if there are any force-majeure circumstances, in order to achieve these final results, countries will discuss this question. But for now this is premature and again I want to stress that we are concentrating on achieving these end results.

AN: As far as going up to the end of 2018, we did discuss that if by that time the market is already balanced, we will need to continue our cooperation and our meetings in order to discuss the ongoing situation on the market and, in theory, research issues related to the energy and oil market. So these OPEC-Non-OPEC meetings could become a regular thing.

SS: You previously said to me, the leaders of the major oil companies are fully aligned behind the Kremlin. And yet I see Mr Leprov [sic] talking on 12 January saying that if prices are above $70 for a period of at least six months then an exit strategy should be considered. Do you agree with Mr Leprov [sic] who one assumes is very keen to develop green-field sites and grow Russian EMP as indeed we understand is Mr Sechin?

AN: Well, I think Mr Alekperov who was present just now in the panel session, he expressed his position just now, fully supports the agreement, as a whole, from the very beginning and is voluntarily participating in this agreement about which I have so often talked about and also today in the panel session. And, of course, he undoubtedly meant long term prices and not one-off fluctuations and the long term will be shaped by the extent to which the market finally balances itself out and the surpluses are removed from the market.

SS: One more question for you sir. The reports that the RIDF, Mr Dmitriev or another Russian organ will invest in the Aramco IPO. Would you be keen for Russia to invest in the Saudi-Aramco IPO?

AN: I have no information with regards how our Russian companies are evaluating their possible participation. This should be done by these companies' specialists, to study the proposals that are out there on the market, including Saudi-Aramco. Therefore, if there will be these sorts of proposals, the companies will announce them themselves. Therefore, we'll see how this all develops with regards this question of the IPO.

ENDS