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Speech at the plenary session of the Third Summit of the Gas Exporting Countries Forum

President of Russia Vladimir Putin: Mr Chairman, colleagues, ladies and gentlemen,

Close cooperation between gas producers and suppliers is an increasingly important factor in global energy’s stable development today. Over these last 14 years, the Gas Exporting Countries Forum has become a solidly established international organisation that helps the gas producing countries to work together to promote their interests on the global markets.

The forum’s participating countries account for the vast majority of the world’s proven natural gas reserves (79 percent, or 85 percent if we count the observer countries), and supply nearly half of the gas traded on world markets.

Our countries and our national companies are investing huge amounts of money in long-term gas exploration, production, processing and transportation projects. In this way, we make a major contribution to the world’s energy security and to steady global economic development.

The agreements reached at the previous summit in Moscow made it possible to increase considerably our countries’ coordination on strategic gas sector development issues and laid the foundations for developing common approaches to fair price formation and equal distribution of risks between energy suppliers and consumers.

I am sure that today’s meeting will be just as productive and the decisions set out in the final declaration will give a new boost to our cooperation and make our common efforts to improve the international gas trade even more effective.

In this respect, I think the theme ‘Natural gas is the best fuel for sustainable growth’, which our Iranian partners have proposed as the main discussion theme at this summit, is particularly relevant today.

Gas is the most affordable, economically advantageous and environmentally friendly energy source. Growth in global demand for gas outstrips demand for oil and other energy sources. Forecasts show that by 2040, global gas demand will increase by 32 percent to nearly 5 trillion cubic metres. I remind you that demand in 2014 came to 3.7 trillion cubic metres.

This opens up big opportunities for developing gas production and export, and it also raises a serious challenge, because we will need to speed up dramatically the development of new fields, modernise processing facilities and expand the gas transport infrastructure, bringing on line new pipelines and organising extensive routes for liquefied natural gas supply.

These ambitious plans require largescale investment, which can take decades to bring a return. Investors will need firm and clear guarantees, of course. Most importantly, however, the future gas consumers and gas producers should take an equal share in investment risks. Everyone has to pay for energy security – exporter countries and consumer countries. This is fair and in keeping with the spirit of market relations.

We know that modern technology and business models are changing the way the gas market is organised in the world. Stock market trading methods and spot mechanisms are increasingly used to establish prices today.

Last year, we in Russia, for example, began gas trading on the St Petersburg Commodities exchange. Trade came to 6.8 billion cubic metres over less than a year, and we have plans to bring this up to 35 billion cubic metres a year. At the same time, Gazprom, our leading company, sold 17 billion cubic metres of gas in spot trading – more than 8 percent of its total sales.

What I want to stress though is that in the interest of a stable and predictable market, as we continue working to attract investment into the gas sector, we should under no circumstance abandon the tried and tested practice of long-term contracts and the ‘take and pay’ principle. I think it important that the forum’s participating countries show solidarity on this issue.

Colleagues, in our draft national Energy Strategy through to 2035, which we are currently working on, we have planned for a considerable increase in natural gas production – by 40 percent. In 2014, we produced 578 billion cubic metres, and by 2035, we plan to produce 885 billion cubic metres.

We plan to carry out a number of infrastructure projects with our partners from the European Union, and are working with Turkey on settling the southern transport route. Our country will also export gas and increase supplies to Asia, and in this region, we have very positive work underway with our Asian partners – with China, India and other partners. We plan to increase supplies to Asia from 6 percent to 30 percent – up to 128 billion cubic metres.

We will increase production of liquefied natural gas to 60 million tonnes. This will take us from today’s 4 percent of the global LNG market to 13 percent. In this area, we have planned a number of projects in Russia’s eastern and northern regions and in the Russian Far East.

I am completely confident that Russia can carry out all of these plans successfully. Our country is up to this task. At the same time, we are ready for the closest cooperation with our partners in the Gas Exporting Countries Forum and with other interested countries in order to satisfy global energy demand and ensure sustainable global economic development in general.

Thank you very much for your attention.