Putin: Gas Markets Cannot Avoid Long-Term Contracts

Gas markets cannot avoid long-term contracts, according to Russia’s President Vladimir Putin at the Second Summit of the Gas Exporting Countries Forum (GECF).

“New hydrocarbon production and transport technology are certainly making supply on the gas market more elastic. New price references are emerging, including spot market prices. But this is not a reason to abandon effective instruments that have been tried and tested in practice, including long-term contracts and the ‘take or pay’ principle,” said Putin on Monday. 

The summit's agenda covered a number of issues, including boosting of gas consumption and development of world gas markets, as well as possible steps to protect the interests of gas producing countries. 

“Industrial development of new resource types such as shale gas, difficult-to-access reserves and deep offshore reserves, coalbed methane and gas hydrates is expanding. This is strengthening gas’ position on the global market. At the same time though, pressure is growing on the exporting countries. This is a serious challenge for all of us,” stated Putin as reported by the note released by the Kremlin.

Over these last years, the Forum has undergone a rapid transformation from an informal discussion platform to a full-fledged international organisation bringing together the world’s main gas producers and exporters. 

The Gas Exporting Countries Forum is now an organization of 11 of the world's leading natural gas producers. The members are Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago and Venezuela.

Putin also commented on other changes in the gas markets, saying that there are “attempts to impose on producers economically unacceptable conditions for supply via pipeline systems.”