President Vladimir Putin on Thursday reiterated Russia’s plan to build a new “gas hub” in Türkiye and said prices for sales to Europe would be defined using an “electronic platform” that would be set up at the center.
In October, Putin floated the idea of setting up a “gas hub” in Türkiye following mystery explosions that damaged Russia’s Nord Stream gas pipelines under the Baltic Sea and halted its direct gas sales to Germany.
Russia’s energy sales to the European Union have sharply fallen since the start of its war in Ukraine, as the EU moved to cut dependence on Moscow.
Turkish President Recep Tayyip Erdoğan backed Putin’s idea and both countries instructed authorities to work on a roadmap that could be announced as soon as this month.
“Our neighbors, including Türkiye, are among the key emerging consumers of Russian gas. Its gas infrastructure has serious potential. We plan to set up a gas hub in the coming years,” Putin told a televised meeting with officials.
“But if we are talking about setting up an electronic platform, then this can be done within the next few months. And it is there, to a large extent, that we will determine the final price for our European consumers.”
Putin did not give any details about the proposed platform.
Moscow is looking to boost gas sales to countries such as China and Türkiye, as the Ukraine conflict sours trade with the West, but building the infrastructure could take years.
Putin called the EU’s policy on gas prices “madness” and rejected all claims against Russia on the matter.
“What they have done on their platforms is madness. Furthermore, they are now attempting to lay the blame for what they have done with their own hands on us,” he added.
Putin has criticized Europe for choosing spot pricing mechanisms for gas instead of long-term contracts, which used to be the backbone of gas exports by Russia’s Gazprom and give the Kremlin-controlled company more certainty.
Putin said Russia would increase gas supplies to “the East,” particularly China.
Russia started selling natural gas to China at the end of 2019 via the Power of Siberia Pipeline, which supplied about 10 billion cubic meters (bcm) of gas in 2021 and is due to reach its full capacity of 38 bcm in 2025. Russia is now Beijing’s No. 3 gas supplier.
In February, Putin reached an agreement to sell 10 bcm of gas to China from Russia’s Far East. Russia also plans to construct a new pipeline, the Power of Siberia 2, via Mongolia with a view to selling an additional 50 bcm of gas per year.
Putin said the projects would allow Russia to boost its gas sales to China to 48 bcm annually by 2025 and to 88 bcm by 2030.
“In fact, this is more than 60% of gas supplies to the West last year,” Putin said, referring to the 88 bcm.
Meanwhile, Putin also said Russia would expand trade cooperation with new partners to combat Western sanctions.
When spending on the war in Ukraine is squeezing funds for health and education, Putin promised Russians that pensions and the minimum wage would keep rising.
He said Russia would develop its economic relations with partners in Asia, Africa and Latin America to thwart Western efforts to isolate it economically.
“We will remove restrictions in logistics and finance. Let me remind you that by introducing sanctions, Western countries were trying to push Russia to the periphery of world development. But we will never take the route of self-isolation,” he said.
“On the contrary, we are broadening, and will broaden, cooperation with all who have an interest in that.”
Russia’s economy is expected to shrink by 2.5% in 2022, Putin said, acknowledging certain “difficulties” but repeating his familiar line that Western economies have suffered a boomerang effect in the form of surging inflation resulting from their own sanctions.
With no end in sight to the Ukraine war, Russia has outlined plans to spend nearly a third of next year’s budget on defense and domestic security while cutting funding for schools, hospitals and roads.
But Putin, who is expected to seek re-election in 2024, was at pains to emphasize he would protect the poorest and most vulnerable in society.
“Despite the objective difficulties of the current year, we will achieve positive results in reducing poverty, and next year we need to reinforce this positive dynamic,” he said.
He set a priority for the government to achieve a tangible real-terms increase in salaries next year, and said the minimum wage must be increased faster than inflation.
