Putin says current gas price crisis confirms Europeans’ mistakes

MOSCOW, Oct 6 (PRIME) -- The current gas price crisis in Europe confirms that Russia’s European counterparts have mismanaged the energy market, Russian President Vladimir Putin said during a governmental meeting on energetics on Wednesday.

“We talked to the last European Commission, and all its activities were aimed at winding down long-term contracts. It was aimed at transition to the exchange gas trade, and it turned out, it has become absolutely obvious today, that this policy was a mistake. A mistake, as it does not take into account the specifics of the gas market due to a large number of uncertainties,” Putin said.

“Therefore, sharp and ill-considered actions can and, judging by the current market situation, are already leading to serious imbalances. All this (turmoil) leads to failures … and as a result, the gas price has now broken all historical records, and today it is already tending towards $2,000 per 1,000 cubic meters. This is more than 10 times the average price of last year.”

The global economy is successfully recovering spurring up both gas prices and demand. Also, Europe experienced a cold winter this year, which drained the reserves in the underground gas storages, Putin explained.

Russia is ready to work to stabilize the global energy market taking into account the interests of all participants, provided it is on a commercial basis, Putin said, adding that “the current situation on the European energy market is another good example of the fact that … politics-based steps are unacceptable in any sphere.”

According to the president, Russia has always been and remains a reliable gas supplier to Europe and Asia. In January–September, Russia’s gas supplies to Europe increased by 15%, or 18.8 billion cubic meters, on the year. “If this rate is maintained, we can reach another record of our energy supplies to Europe, including gas,” Putin said.

“(Russia) always fulfills all its obligations in full, every single one, I want to emphasize that … There has never been a single case in history when Gazprom refused to increase supplies to its customers if they requested it. Not a single one,” Putin said.

 “We see all sorts of speculations about the gas transportation system in Ukraine, about deliveries through it. Our contractual obligations on deliveries through the Ukrainian pipelines stand at 40 billion cubic meters per year. … It is safe to say that we will exceed our contractual obligations to deliver gas through the territory of Ukraine,” Putin said.

President also said that delivering gas via the new routes is “considerably cheaper, about $3 billion a year to the corresponding supply,” than through the territory of Ukraine.

At the same time, Russia’s own energy and macroeconomic stability are supported by the budget rule and replenishment of the National Wealth Fund (NWF) regardless of the global energy prices, the president said.

The president also said that Russia needs a farsighted approach to energy stability to prevent crises.

“Our decisions … must be balanced, … and focused on the long term. … It is necessary to diversify the economy, actively invest in infrastructure and the creation of new industries. Particular attention should be paid to the coal-mining regions, creating new jobs there outside the coal sector,” Putin said.

“We need to try to look beyond the horizon of not one, but two or three decades. Starting in 2035, the oil demand growth will begin to slow down, but overall consumption will increase by about 0.7% annually until 2045. Natural gas demand will continue to grow at a higher rate, over 1% per year. It is already necessary to analyze the impact of potential changes in the energy sector comprehensively, the impact of these changes on our economy.”

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