UPDATE: Putin says systemic flaws reason for energy market crisis in EU

(Adds details in paragraph 8, last two paragraphs)

MOSCOW, Oct 13 (PRIME) -- Systemic flaws have led to a large-scale crisis on the European energy market, Russian President Vladimir Putin said at the Russian Energy Week forum on Wednesday.

“Systemic flaws have been enclosed into the European energy (industry) step by step over the past decade. They are to be blamed for a large-scale market crisis in Europe,” he said.

The prices for gas in Europe have jumped steeply in the past few months, more than doubling from early August to the end of September. A record high of U.S. $1,937 per 1,000 cubic meters was registered on October 6.

Putin added that there were no such crises when the energy industry was mainly basing on nuclear and natural gas power capacities.

“Such problems cannot be imagined in Russia today,” the president said.

Putin also said that the situation on the European gas market does not look well-balanced or even predictable, and added that the main reason is that “not everything on the market depends on producers… gas consumers take not a smaller, but maybe a larger part.”

Inflation of gas prices in Europe has stemmed from a deficit of electrical power, but not vice versa, he said, and added that Russia will reach record high gas supplies to the global market later this year.

The president said that Russia is ready to prolong its gas transit contract with Ukraine beyond 2024, but it needs to understand the volume of gas European customers are ready to buy and wants the Ukrainian gas transportation system to be upgraded as its wear and tear amounts to 80–85%.

Putin said that deliberate decisions of both power producers and consumers are necessary for further sustainable development.

“The consequences of the pandemic, which have shaken regional energy markets, have showed again how important stable work of the energy industry is for the modern world… Deliberate and responsible actions of all the market participants are crucial to ensure the planet’s energy and environmental security,” he said.

He added that the climate agenda should not become a tool to solve economic and political issues, and fair rules for everyone are necessary, and that there should be no place for sanctions in implementation of climate projects.

Russia plans to reach carbon neutrality until 2060, the president said.

He also said that he will ask the government to revise Russia’s program of energy saving and energy efficiency and to prolong it until 2035.

Russia hopes to increase liquefied natural gas (LNG) production to 140 million tonnes and to reach a share of 20% of the global LNG market by 2035, as well as to raise its share on the petrochemical market to 7% from the current 1%, Putin said.

The OPEC+ oil production cut deal has stabilized the oil market, the president said, and hoped that the agreement will be in force until the end of 2022.

He also said that Russia does not aim at restraining the production in order to push the prices upwards and believes that all the moves should be smooth and well-weighted.

Putin said that he has not yet discussed oil prices with his U.S. counterpart Joe Biden and does not rule out that oil prices can reach $100 per barrel.

End