The three projects will be carried out in joint venture with Saudi Aramco, which will take a 20 per cent stake in each.

'The deal is extremely important for Lukoil. It is obviously the result of the agreement reached between President Putin and Crown Prince Abdullah last year,' said a Lukoil Overseas executive. 'Saudi Arabia is a new country for us, a major oil state and an opportunity to gain access to the global market.'

During a visit to Russia last September, officials from both countries signed a bilateral agreement that called for the 'implementation of joint projects and investment in the oil and gas industries', according to Russia's Foreign Affairs Ministry. Under the accord, the countries also agreed 'on the need for co-ordination and co-operation in oil policy with a view to achieving stability and predictability in the world oil market'. Only days before the gas deal was signed in Riyadh the Russian ambassador to Saudi Arabia publicly reiterated his government's support for the deal.

Both Saudi and Russian parties have previously asserted that politics did not play a role in the successful bid for the concession, saying that the win was based purely on technical and financial criteria. However, Lukoil's aggressive bid, which scored twice as high as its next competitor in the bidding process, has given rise to speculations that political interests have played some role in the outcome (MEED 5:3:04, Cover Story).

'No question in my mind that strengthening the economic relations will strengthen other areas of co-operation,' Petroleum & Mineral Resources Minister Ali Naimi said after the signing ceremony (see Banking & Finance).