President Trump’s first official overseas trip to Saudi Arabia is designed to address numerous critical security, economic, religious, and social issues. And while cooperation in the fight against terrorism is at the top of the agenda – with an expected approximately $100 billion arms deal announcement – energy business deals struck between US and Saudi interests could have powerful oil and gas market implications in both countries.

The Trump team will attend three major summits: The Saudi Arabia and United States summit; the Gulf Cooperation Council (GCC) and United States summit; and the Arab Islamic American summit. In addition to these high-powered meetings, the first Saudi-US CEO Forum will be held in Riyadh tomorrow. “More than 50 U.S. companies, 40 Saudi companies and 9 global companies will attend the forum” according to the Saudi Press Agency.

The Financial Times reported that in addition to leadership from some of the largest US banks and private equity firms who will discuss Saudi Aramco’s upcoming IPO, several major energy industry players will also travel to the kingdom, including GE, Dow Chemical, Schlumberger, Halliburton, Weatherford, Nabors, Rowan Companies, KBR, Jacobs Engineering Group and McDermott International.

A host of potential investment partnerships will be on the table. Major infrastructure development in the U.S. and Saudi Arabia will be discussed. The Saudi’s sovereign wealth fund is expected to announce roughly $40 billion of US infrastructure spending. Part of that could go towards expanding the Saudi’s U.S. refining and marketing activities. National Oil Company Saudi Aramco acquired full control of Motiva Enterprises from Shell earlier this year. Motiva is the largest refining complex in the US with nameplate capacity of 600,000 barrels per day. The company also has a long-term license to use the iconic “76” gasoline brand and recently announced plans to expand gasoline sales under the 76 name into key Gulf Coast and East Coast markets, including Washington DC. Related: Oil Prices Rise As Most OPEC Members Back Deal Extension

Back in Saudi Arabia, US oil services companies are reportedly being tapped to help the kingdom develop its own domestic oil field services industry in an effort to procure two-thirds of its oil and gas sector development goods and services locally. This is part of Saudi Vision 2030, a major economic reform initiative designed to diversify sources of government revenue away from oil.

The arrangement could be a mixed blessing for US service companies that sacrifices longer-term business opportunities for short-term gain, but the details will become clearer as deals are announced. In fact, the entire afternoon of the Saudi-US CEO Forum is dedicated to “MOU [Memorandum of Understanding] Signatures witnessed by the Custodian of the Two Holy Mosques & the U.S. President,” which clearly indicates preliminary deals are expected to be struck.

By Jared Anderson for Oilprice.com

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