Vladimir Putin says Europe cannot drop Russian gas

Russian leader looking to diversify supplies to Asian markets in face of sanctions

Europe is dependent on Russian energy. AFP

Live updates: follow the latest news on Russia-Ukraine

European nations were warned by Russian President Vladimir Putin that alternatives to Russian gas do not exist as he also looked to diversify into Asian markets.

Mr Putin said Russia would try to reduce its reliance on European customers as both sides feel the fallout of sanctions imposed after the war broke out in Ukraine.

“A reasonable replacement for Europe simply does not exist,” Mr Putin said. “There are simply no spare volumes in the global market, and deliveries from other countries, primarily the US, which may be sent to Europe, will cost the consumers many times more.

“Attempts of western countries to push out Russian suppliers, replace our energy resources by alternative supplies, will inevitably affect all the world economy.

“Consequences of such a step can become quite painful, first of all, for initiators of such a policy.

“What is surprising here: so-called partners from unfriendly countries assume that they can avoid Russian energy resources, including natural gas. Its reasonable replacement for Europe doesn’t exist.

Vladimir Putin chairs a meeting during which he called for diversification of energy exports towards Asia. AFP

“It is possible, but it doesn’t exist so far. Everyone understands there is no free volume (of energy resources) on the world market.

“Banks from unfriendly countries delay transfers of payments. I will remind we set a goal to convert calculations for energy resources to national currency, progressively moving away from the dollar and the euro. All in all, we are going to increase the proportion of calculations in national currency in the system of external trade.”

In the coming weeks, a new Russian law kicks in mandating unfriendly European buyers of Russian gas will need to start paying for April deliveries — an order the EU says will be breaking its sanctions.

Earlier this month, Mr Putin gave a warning that any refusal to pay in roubles would result in deliveries being halted.

At Thursday’s meeting, Mr Putin did not repeat that warning but added Russia will work on weaning itself off a reliance on energy buyers from the West.

“We will assume that in the foreseeable future, westbound energy supplies will be shrinking,” he said. “This is why it’s important to solidify the trend of the past several years, and step by step redirect our exports to the fast-growing markets of the South and the East.”

Some redirection of Russian volumes is happening now in the oil market. Many key buyers either refuse to take Russian cargoes or pledge not to once their contracts expire. Still, Russia has been able to send some of the oil flows to Asia, luring buyers with large discounts.

Redirecting Russian natural gas flows from Europe to Asia isn’t possible because the nation’s eastbound and westbound pipeline systems operate independently. Gazprom PJSC is considering building an interconnector if it signs a third supply contract with China.