(Adds details and context, paragraphs 3-6)
ST PETERSBURG, Russia, June 20 (Reuters) - Russia's state-backed private equity fund, the Russian Direct Investment Fund, and Abu Dhabi-based Mubadala Development Co are setting up a $2 billion fund to invest in projects in Russia, the parties said on Thursday.
Each side will contribute $1 billion and the fund will focus on investments in various industry sectors, they said.
The RDIF was created to give major foreign investors greater comfort in Russia's uncertain business environment and is investing with private equity, strategic investors and sovereign wealth funds.
Russia has been trying to attract investment from around the world for various projects, and the Middle East's oil wealth is a key area to tap.
Investment so far from the region has been minimal, although there have been some commitments made over the past year.
Middle East investors last year put $175 million into Russian power generator Enel OGK-5 alongside the RDIF, while Qatar's sovereign fund this year invested in state-controlled bank VTB. (Reporting By Alexei Anishchuk; Writing by Megan Davies; Editing by Steve Gutterman and Jim Marshall)