Russia's Putin says 'era of cheap gas' is over

14:20, 23 December 2008
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Russian Prime Minister warns consumers

Russian Prime Minister Vladimir Putin warned consumers on Tuesday that the "era of cheap gas" is coming to an end, in a keynote speech to a meeting of gas exporting countries in Moscow.

"The expenses necessary for developing fields are rising sharply, and this means that despite the current problems in finances the era of cheap energy resources, of cheap gas, is of course coming to an end," Putin said.

Putin`s comments come amid a months-long standoff between Ukraine and Russia over Kiev`s debts to Russian energy giant Gazprom and the price it should pay after the New Year.

Gazprom supplies a quarter of the European Union`s gas, mostly via Ukraine.

Putin also said that the gas industry -- which he described as more rigid than the oil market -- would be hard hit by the current financial crisis.

"Between August and November 2008, oil prices have fallen four times. Of course this has already had an effect on the gas market, where prices are indexed to oil."

"We can expect that the crisis will have a more serious effect on the gas industry than the oil business and its recovery will take longer."

Putin was speaking at a meeting of the Gas Exporting Countries Forum, which groups Russia, the world`s biggest gas producer, with other gas-rich states such as Iran and Qatar and 11 other gas-exporting countries.

Officials from countries in the forum have dismissed Western concerns that it could become an OPEC-style cartel.


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