Putin tells Europe: You still need Russian gas, but we are heading east

Russian President Vladimir Putin visits the construction site of the Amur Angara missile launch complex at the Vostochny cosmodrome in the Amur region, Russia, April 12, 2022. Sputnik/Mikhail Klementev/Kremlin via Reuters/File photo

(Reuters) – Russian President Vladimir Putin said on Thursday that Moscow will redirect its energy exports eastward as Europe tries to reduce its dependence on them, adding that European countries would not be able to give up Russian gas immediately.

Russia supplies about 40% of the European Union’s natural gas, and Western sanctions over what Moscow calls its “special military operation” in Ukraine have hurt its energy exports by complicating the financing and logistics of existing deals.

As the European Union debates whether to impose sanctions on Russian gas and oil, and member states seek supplies from elsewhere, the Kremlin has been forging closer ties with China, the world’s largest energy consumer, and other Asian nations.

“The so-called partners from unfriendly countries themselves admit that they will not be able to live without Russian energy resources, including without natural gas, for example,” Putin said at a televised government meeting.

There is no logical alternative (to Russian gas) in Europe now.”

Putin also said that Europe, by talking about cutting off energy supplies to Russia, is raising prices and destabilizing the market.

He said Russia, which produces about a tenth of global oil production and about a fifth of gas, would need new infrastructure to boost energy supplies to Asia.

He ordered the government to submit a plan by June 1 that includes “the expansion of transport infrastructure to countries in Africa, Latin America (and) Asia and the Pacific.”

He also sought to clarify the possibility of including two pipelines – Power Siberia to China and the Far East Sakhalin – Khabarovsk – Vladivostok in the unified Russian gas supply system.

Blocking these routes into Russia’s broader network might, in theory, switch gas flows from Europe to Asia and vice versa.

Russia launched pipeline gas supplies to China at the end of 2019 and in February agreed to a 30-year contract via a new pipeline, not yet built, with plans to settle sales in euros. Read more

Putin also said the role of national currencies in export deals should rise amid Russia’s plans to switch to the ruble in payments for gas supplies, especially to Europe.

Russia has seen a sharp decline in oil production, its main source of revenue, amid difficulties with payments for trade and ships. Read more

Sources said that major international trade companies plan to reduce purchases of crude oil and fuel from Russian state-controlled oil companies by May 15, to avoid falling into the trap of European Union sanctions imposed on Russia. Read more

Putin said that the sector’s most acute problems are related to the disruption of energy supply logistics.

Reporting by Reuters. Editing by Guy Faulconbridge and John Stonestreet

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