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President of Russia Vladimir Putin: Good afternoon, friends, ladies and gentlemen.

I would like to welcome all the participants and guests of Russian Energy Week, a respected and recognised platform for dialogue on key global energy topics.

Such direct and transparent communication is essential now, when the global economy in general, the fuel and energy sector are in the middle of, let me be direct, an acute crisis due to unstable price dynamics of energy resources, an imbalance in supply and demand, and the overtly subversive actions of individual market participants, who are guided solely by their own geopolitical ambitions, resort to outright discrimination in the market, and if that does not work, they simply destroy the infrastructure of their competitors.

In this case, I am of course talking about the sabotage of the Nord Stream 1 and Nord Stream 2 gas pipelines. There is no doubt that this is an act of international terrorism, the purpose of which is to undermine the energy security of the entire continent. The logic is cynical: to destroy and block cheap energy sources, hence depriving millions of people, industrial consumers of gas, heat, electricity and other resources and forcing them to buy all this at much higher prices. Forcing.

The attack on the Nord Streams has set an extremely dangerous precedent, which shows that any critical piece of transport, energy or communications infrastructure is under threat, regardless of its location, management or whether it lies on the seabed or on land.

It was proven by, well, it may not be the right place to talk about this, as Russian Energy Week is not directly related. However, I must say that it was proven by the terrorist attack on the Crimean Bridge committed by Ukrainian intelligence. I have already said that the Kiev regime has long resorted to terrorist methods, organising political assassinations, ethnic purges and crackdowns on civilians. They upload results on the internet, and then realise it was a mistake and immediately delete them. But the content stays online. They do not stop at nuclear terrorism either, specifically the shelling of the Zaporozhye Nuclear Power Plant, terrorist attacks near the Kursk Nuclear Power Plant in Russia and, of course, sabotage attempts against TurkStream.

I would like to repeat that there is solid documented evidence. These crimes were plotted and ordered by the end beneficiaries seeking instability and conflicts.

And who stands behind the sabotage against the Nord Streams? Clearly, those who want to completely sever ties between Russia and the European Union, to fully undermine and crush Europe’s political agency, weaken its industrial potential and seize the market. And, of course, those who – I want to stress it – have the technical capacity to organise such explosions and in fact have committed similar sabotage in the past and were caught red-handed but evaded punishment.

The beneficiaries are well known. I believe no specific details are necessary since the remaining gas systems will acquire greater geopolitical significance. They stretch across Poland (Yamal‒Europe), and Ukraine, the two pipelines that Russia once built with its own money. And, of course, the United States, which will now be able to supply energy resources at high rates.

As they say, in decent companies, this is “highly likely.” Everything is clear. It is obvious who stands behind this and who stands to gain.

Now it is possible to impose large volumes of LNG from the United States on European countries, LNG which is obviously less competitive than Russian pipeline gas. After all, the price of American LNG is much higher, and this was common knowledge before. Now the difference is even greater and there are additional risks. The risks lie in high instability – any supplies may float away to other countries. Incidentally, we watched this happen quite recently, when American tankers carrying LNG to Europe turned around halfway and changed their destinations because LNG sellers were offered a higher price elsewhere. They ignored the interests of their European customers.

I would like to recall who helped Europe at that time and sent additional gas supplies to the European market. It was Russia. However, the leaders of these countries prefer not to recall this. Moreover, they deem it possible to reproach us for being “unreliable.” Do we deny supplies to them? We are ready to ship and we are providing them with all the quantities, as agreed under our contracts. We are supplying them with all the contractual amounts. But if someone does not want to take our product, what do we have to do with this? That is your decision.

I have noted many times that the Nord Stream lacks any political background. It is a strictly commercial project, in which Russian and European companies take part on equal terms. Hence, Russia and our partners in EU countries should resolve the future of Nord Stream 1 and Nord Stream 2.

It is certainly possible to repair the damaged gas pipelines that run under the Baltic Sea. But this will make sense only if their further use is economically feasible and the safety of their routes can be ensured – this is the fundamental prerequisite.

If we come to an agreement with the Europeans to supply gas through the surviving branch – and one branch of Nord Stream 2, apparently, has survived… Unfortunately, we are not allowed to help inspect this branch, but the pipeline is holding pressure. It might be damaged, but we do not know this, because as I have said, we are not allowed to inspect it, but there is pressure, which means, apparently, that it is in working order. Its capacity is 27.5 billion cubic metres per year, which is about 8 percent of Europe’s gas imports.

Russia is ready to begin deliveries. The ball is in the EU's court. If they want to, they can just turn on the tap and that is that. I repeat that we are not restricting anyone or anything, and are ready to supply additional volumes in the autumn and winter period.

We have spoken more than once, including at the Russian Energy Week platform, about the causes and nature of the crisis that is unfolding in the European market, including their excessive enthusiasm over renewable energy sources to the detriment of hydrocarbons. Of course, alternative types of energy should be explored – solar, wind, tidal and hydrogen energy. We need to explore them all, but we need to take into account the current volume of consumption, the growth rates of the global economy, the demand for energy resources and the level of technological development. But jumping the gun, for political reasons, especially populist domestic policies – come on, who does that? But this is what they did – and here is the result. The same holds true for the curtailment of nuclear energy, as well as the rejection of long-term contracts in the gas sector and the shift to exchange quotations.

Incidentally, according to expert estimates, this year alone, the spot gas pricing mechanics have caused Europe more than 300 billion euros in losses – about 2 percent of the Eurozone's GDP. This could have been avoided if they stuck to long-term oil-linked contracts. You are all professionals and must understand what I am saying: the price difference between the spot market and long-term contracts is three- or four-fold. And who did it? Was it Russia? They did it themselves. In fact, they imposed this trading system on us. They have essentially forced Gazprom to shift, in part, to a link to the spot market, and now they are groaning. Well, it is their own fault.

It is clear how this problem of high rates will be solved. We have seen the same strategy being used with other commodity groups. They simply print more money. In the past year alone, the money supply in the EU has increased by around one trillion euros. The problem is what Europe is going to do with this money. Europe will, just like with other goods, including food, grab them and gas from the global market. As a result, other countries, especially developing countries, will have to overpay for these energy resources.

The resources that come to the European market are sold literally triple the price, as I have said, and this feeds inflation. It has already reached 10 percent in the euro zone. It is hitting ordinary Europeans as their electricity and gas bills have more than tripled over the past year. The European population is stocking up on wood for winter, like in the Middle Ages.

What does Russia have to do with it? They are constantly trying to blame others for their own mistakes, in this case Russia. I want to stress again that it is their own fault. It is not even a result of certain actions during the special military operation in Ukraine and Donbass. Absolutely not. It is the result of years and years of bad energy policy. Years and years.

Rising costs are crippling local companies. Some industries are experiencing production decline in the double digits. Deprived of affordable energy resources from Russia, European businesses have to shut down and look for better conditions in other jurisdictions. This process is underway.

I cannot help but quote some statistical data. According to EU statistics, exports to Russia amounted to 89.3 billion euros in 2021 and imports from Russia to 162.5 billion euros. The deficit in Russia’s favour is 73.2 billion euros. That is data for 2021. In the early months of 2022, this deficit increased to 103.2 billion euros.

What caused it? We sell our goods and we are ready to buy European products, but they refuse to sell them. They imposed embargos on several categories of goods one after another, hence the deficit. What does this have to do with us? They will blame us again. We sell what they want to buy – and at market rates. We are ready to buy from them but they will not sell. The deficit keeps growing, to repeat, through no fault of our own. Just do not walk away from cooperating with Russia. That is it.

I would like to note – as European officials at the highest level also mentioned – that European wellbeing in the past decades has been mainly based on cooperation with Russia.

The consequences of the partial rejection of Russian goods are already hitting the European economy and residents. But instead of working on restoring their own competitive advantage in the form of affordable and reliable Russian energy sources, the Eurozone countries are only making the situation worse, including by capping the price of oil and oil products from our country. But it is not only European countries; they are doing this together with North America, as planned, beginning December of this year.

I will quote the American economist, Nobel Prize winner Milton Friedman: “If you want to create a shortage of tomatoes, for example, just pass a law that retailers cannot sell tomatoes for more than two cents per pound. Instantly you will have a tomato shortage. It is the same with oil or gas,” end of quote. Let me remind you that Milton Friedman passed away in 2006. He had nothing to do with the Russian government and cannot be designated as a Russian agent of influence.

It would seem that these are truisms. But the leaders of some countries, their bureaucratic elites dismiss these obvious considerations, and, on someone else's command, are deliberately pursuing a policy of deindustrialising their countries, reducing people’s quality of life, which will certainly entail irreversible consequences.

It should be clearly understood that if the price of oil from Russia or other countries is limited, if some artificial price caps are imposed, this will inevitably worsen the investment climate in the entire global energy sector, then exacerbate the global shortage of energy resources and further increase their cost, and this, I repeat, will primarily hit the poorest countries. These inevitable consequences are plain to see. And experts, including world-class ones – I just gave you a quote – talk about it all the time.

No amount of intervention or the unsealing of oil reserves will remedy the situation. They simply do not have as much spare resources as they need – that is the whole point. They need to understand this eventually.

The fact is that aggressive promotion of the green agenda, which, of course, needs support, as I said, but it should be done right, so, the aggressive promotion of this agenda, including in the euro area, has led to underinvestment in the global oil and gas sector. Already. Meanwhile, the EU and the United States have imposed sanctions on leading oil producers, which make up about 20 percent of the global output.

As a result, in 2020–2021, investment in oil and gas production dropped to the lowest levels in the past 15 years. You see, it happened in 2020 and 2021, long before our special operation in Donbass. Investment was less than half of what it was in 2014 in the wake of what the so-called Western politicians did, and businesses underinvested by $2.5 trillion. I will come to that later: what does the OPEC+ decision have to do with it? The OPEC+ decision is designed solely to balance the global market. They have found their scapegoat in OPEC+. What does it have to do with anything? Clearly, to reiterate, they are simply covering up their mistakes. I will come to that later.

There is one more important point. Suppose the oil price cap is imposed. Who can guarantee that a similar cap will not be imposed in other sectors of the economy, such as agriculture, the production of semiconductors, fertilisers, or the metal industry, and not only with regard to Russia, but to any other country? No one can give such guarantees, meaning that with their reckless decisions, some Western politicians are breaking the global market economy and are, in fact, posing a threat to the well-being of billions of people.

The so-called neo-liberal ideologists of the West are known to have destroyed traditional values before, we all see. Now, they seem to have set their sights on free enterprise and private initiative.

As I mentioned earlier, Russia invariably fulfills its obligations in stark contrast to Western countries, which cynically refused to honour signed finance and technology, as well as equipment supply and maintenance contracts.

I am here to say one thing: Russia will not act contrary to common sense or underwrite someone else’s prosperity. We are not going to supply energy to the countries that introduce price caps. I want to tell those who prefer con jobs and shameless blackmail to business partnerships and market mechanisms – we have been living in this political paradigm for decades now – you should know that we will not do anything that disadvantages us.

We strongly believe that stability, balanced energy markets and a secure future for all nations can only be ensured through joint efforts in an open and honest dialogue based on the principles of joint responsibility and consideration for each other's national interests.

This is the kind of dialogue we have established with our partners under the OPEC+ agreement, as I have just mentioned. As you know, we recently reached the most recent agreements, which primarily reflect supply and demand trends for oil, as well as long-term investment programmes for the oil industry, which, as I have already said, is objectively underfunded.

In October, the quota for oil production in our countries will remain at the August 2022 level, and then it will be cut by 2 million barrels per day. We hope that these decisions will suit both oil producers and consumers. At the same time, the coordination between the OPEC+ partners will certainly continue to ensure the stability and predictability of the market. Experts know that predictability is the key issue.

Colleagues,

Russia is one of the key participants in the global energy market and among the world leaders in oil and gas production and exports, as well as electricity generation and coal mining.

Despite the sanctions and sabotage of infrastructure, we do not intend to cede our positions. We will continue to ensure stable energy security and expand ties with countries that are interested in this.

Oil production in Russia has already recovered and is even slightly higher than last year. We plan that by 2025, our total oil exports, as well as production, will remain approximately at today’s level.

There is something I would like to note. In recent decades, Russian oil production has been largely dependent on foreign equipment and services, but by 2025, we plan to increase the share of domestic equipment in the industry to 80 percent. That is, despite the Western companies leaving the Russian market (they are only making it worse for themselves), we will be able to ensure oil production at the required level.

As for Russian gas, we will certainly take our product to the international markets. Projects such as Power of Siberia and TurkStream have proven their effectiveness. We have the Blue Stream for Turkiye’s domestic market, and 14 billion cubic metres of gas are in transit to Europe via TurkStream. Not a lot, but still something.

Here is what I would like to say in this regard. We could move the lost volume of transit through the Nord Stream pipelines along the bottom of the Baltic Sea to the Black Sea region and thus make Turkiye the main route for the supply of our fuel, our natural gas to Europe and create a major gas hub for Europe in Turkiye, if, of course, our partners are interested in seeing this happen. It is an economically viable project with much higher safety levels as can be seen from recent events.

The high-tech LNG segment is making strides. Its production in Russia increased by almost 60 percent in August. In particular, the unparalleled Yamal LNG plant located in the Arctic latitudes is operating successfully. Our systematic measures to develop the Arctic’s resource base, the Northern Sea Route and the transport and icebreaker fleet have yielded good results.

We will continue to increase energy exports to fast-growing markets. Of course, we will be expanding the geography of our deliveries, identifying key pieces of infrastructure for doing so and building them, including promising projects such as Power of Siberia-2 and its Mongolian section Soyuz Vostok, as well as lining up the Asian and European segments of the national gas transmission system. We will continue to support LNG terminal projects. All of the strategic and very specific goals in this area have been set before the Government of Russia. I am sure they will be fulfilled.

We will continue the transition to settlements in national currencies when delivering Russian energy resources. I have already mentioned one such instance where Gazprom and its Chinese partners decided to switch to the ruble and the yuan in equal proportions when paying for supplied gas. Some European partners have also transitioned to payment in rubles for our gas, which you are well aware of as well.

Colleagues,

No doubt, Russia has been and will remain one of the global energy market’s major participants. However, our key goal is to make sure that the domestic fuel and energy complex works for the benefit of the national economy, primarily, its competitiveness, the development and betterment of our regions, urban and rural areas, and improvement of the quality of life of our citizens.

Increasing the volume of raw material processing is a separate strategic goal. We are already implementing ambitious plans in this regard, including projects in the Far Eastern Federal District to develop large- and small-scale oil and gas chemical plants. The number of such projects will increase markedly in the years to come.

The social programme for connecting households to the gas distribution system is gaining momentum. I am referring to towns and villages where the gas network is available. By the beginning of October, over 300,000 addresses had been connected.

At the same time, the cost of gas equipment and installation is a heavy burden on many Russian families; we have already spoken about this. First of all, we are talking about large families, veterans, people with disabilities, and low-income families. We definitely need to help them, and we will. What kind of help are we talking about? I ask the regional authorities to ensure the provision of subsidies for the purchase and installation of gas equipment to those who cannot afford it. The subsidy should be at least 100,000 rubles per connection.

I am aware that different regions have different financial means, so these subsidies in regions with a low level of budget security will be supported by federal resources.

I ask the Government to monitor the implementation of this measure to support families and assess whether any additional steps are needed.

We have made one more decision – we agreed to include schools in the social programme to link them to the gas distribution system. I think that the Government and Gazprom should add medical facilities such as outpatient clinics, hospitals and rural health centres to the programme in the near future – it would be the right thing to do.

This will ensure that the key social facilities in the regions – medical and educational centres – have a source of cheap and environmentally friendly energy, which is especially important for rural areas.

Overall, taking into account the number of new applications from households and the growing number of newly connected facilities, I ask the Government to extend this social programme beyond 2022.

One more thing. Despite the difficult economic situation and the external restrictions, the Russian energy system continues to be updated. This year, facilities with a total capacity exceeding 2000 megawatts were built or modernised.

Due to this systematic approach, we have been able to keep electricity prices in Russia at the lowest level in Europe. Let me remind you that energy prices in the EU have increased several times over this year alone.

Particular attention should be paid to improving the reliability of the electric grids. Special programmes have been launched this year to support the regions where the situation is the most difficult, and I ask the Government to start implementing them as soon as possible.

Friends,

The global energy industry is now facing unprecedented challenges and problems. The short-sighted and erroneous actions by a number of Western countries have been pushing the international community into this situation for years – I have already mentioned this, and I think I was quite convincing.

Effective and constructive ways out of the situation should certainly be the subject of thorough, professional, and depoliticised discussions, including at Russian Energy Week.

I repeat: Russia is ready for a trust-based partnership in the energy sector that serves the interests of our countries’ sustainable development and their reliable access to affordable energy. And we know that this approach is shared by the overwhelming majority of our partners and countries around the world.

I would like to wish you rewarding discussions and to thank you for your attention.

Thank you very much and all the best.