Saudi Arabia and Japan have signed agreements to cooperate on manufacturing, energy and finance as Saudi King Salman visits Tokyo. As David Pollard reports, there could be bigger prizes at stake for Japanese exporters - and for a Saudi economy determined to end its dependence on oil.
Handshake diplomacy for a Saudi King. First a prime minister ... then an Emperor. Though the handshakes that may matter most are those on trade .... These agreements are to cooperate on manufacturing, energy and finance. There's even talk of Toyota building a plant in Saudi. Japan bought 2.2 billion dollars worth of oil from Saudi Arabia in January alone. But it also wants to sell to a Saudi economy that's striving to push away from just oil SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "From Japan it can certainly have clear lessons to learn with respect to technology. It's well funded. It's looking or has been looking to invest more in technology and there we have a second very significant link with Japan and something which Japan can offer." The first link does still matter. Saudi Arabia plans to list its state oil company Aramco. Even a five per cent sale - at potentially one hundred billion dollars - could be the biggest IPO ever. Japan now asking for part of that share trading action - and Saudi courting investors - for a listing expected next year Crude prices now still stubbornly low despite an OPEC deal to curb an output glut. (SOUNDBITE) (English) GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, PETER DIXON, SAYING: "Saudi Arabia traditionally opens up the taps in the spring, and of course we are coming up to that point now. So I think there are clear indications, certainly from market investors, that traditional patterns and indeed the events in the United States suggest that we will certainly be running into a fairly high oil market surplus position by the summer." And the scale of Saudi Arabia's ambitions are not just limited to Japan. The King's visit reported to have a 1500-strong entourage on an Asian sweep to Indonesia, Malaysia, Brunei - and, possibly, China.