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7 Sep, 2022 11:27

Putin warns that EU gas price plan will backfire

The price cap proposal will only lead to rising energy prices, the Russian president says
Putin warns that EU gas price plan will backfire

The proposal by the EU to place a price cap on Russian natural gas imports is a foolish, non-market-oriented plan that has no future, Russian President Vladimir Putin said on Wednesday.

Faced with what is happening now, EU politicians are thinking how to get away with it [paying market prices for gas], and to limit the price by administrative decisions. Another foolish notion, nonsense that will lead to further price increases in the global markets, including Europe,” Putin said during a plenary session of the Eastern Economic Forum (EEF).

According to the president, it is impossible to solve anything to do with the economy and world trade with administrative decisions, which “only lead to distortions and higher prices.” Putin stressed that the situation in the gas market is the result of sanctions and other actions taken by Brussels, including the switch to spot-market trading, while Russia has always preferred long-term contracts for gas exports.

We have always insisted that prices be formed on the basis of long-term contracts and be tied to such a market category as the price of oil and petroleum products… The EU forced us to link to spot prices. Now they’re trying to backtrack by setting price caps,” he said.

According to Putin, accusing Russia of using energy as a weapon is “nonsense.” He stressed that Russia fulfills its contracts, while the current supply shortages are the result of decisions made by other countries – including Ukraine, which shut down one of its gas transit pipelines; Poland, which also shut down part of its section of the pipeline; and Canada, which delayed the maintenance of turbines for the Nord Stream 1 pipeline.

The president added that Russia is still willing to supply energy to those who need it, though Moscow no longer considers the EU to be its main export destination.

By receiving natural gas from Russia, the economies of the leading European countries have for decades enjoyed obvious competitive advantages,” Putin said, in reference to the lower gas costs paid under long-term contracts.

If they think that they don’t need these advantages, that does not bother us at all, because the need for energy resources in the world is huge.”

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