Dubai/Riyadh:  A consortium led by a Saudi royal has struck a deal to invest in an infrastructure project in Russia's Urals region, pointing to an upswing in business ties between the two largest oil producing countries.

Dubai-based Novaar Capital Management, the family office of a descendant of Saudi Arabia's founder, will invest through a joint venture with government-owned Ural Industrial-Ural Polar.

The projects are in an area that produces two-thirds of Russia's oil and almost half its metals.

A person close to the deal said Novaar would invest $750 million (Dh2.7 billion) and seek to raise more funds for the projects.

Prince Saud Bin Mansour Al Saud has signed a memorandum of understanding with Nikolai Vinnichenko, presidential envoy to the Urals Federal District.

"We look forward to... demonstrating how private capital from the Gulf Cooperation Council can work with Russian state organisations to the benefit of all," David Mapplebeck, chief investment officer of Novaar, said.

A Russian state fund has invested $4.2 billion in Ural Polar.

Transport and power

The Saudi-Russian joint venture plans to focus initially on transport and power generation, including the 354 kilometre line linking the port of Salekhar with Nadym, a force in Russia's gas industry.

Ural Polar hopes private investment will make up three-quarters of the estimated $28 billion it needs to attract in the coming years.

Many of Russia's largest companies, such as TNK-BP, Lukoil and others, are expected to take part as funders and operators.

Authorities have estimated that the largely unexplored region could hold hundreds of billions of dollars of untapped mineral wealth.

Power and transport links are vitals for any attempts to mine these largely untapped resources.

Prince Saud, who is in his early 30s, set up Novaar at the Dubai International Financial Centre in February this year to act as an investment vehicle for himself and other members of the Saud family.

Russian-Saudi ties, helped by bilateral visits, have been on the mend as tensions over Chechnya have subsided and Riyadh has failed to echo western concerns over Russia's invasion of Georgia.

But analysts have been disappointed with the scope of ties, which have been limited to bilateral trade flows of about $1 billion and some Russian investment in the Saudi gas sector.

— Financial Times