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WORLD> Europe
Putin warns 'era of cheap gas' is coming to an end
(Agencies)
Updated: 2008-12-24 15:17

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


Russia's Prime Minister Vladimir Putin (R) speaks at a meeting of energy ministers of 12 gas exporting countries in Moscow, December 23, 2008. [Agencies]
 

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"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," Mr Putin said.

Members of the loose grouping of about a dozen gas producers known as the Gas Exporting Countries Forum are planning to sign a joint charter at the meeting. The body has been meeting since 2001 but has no formal membership or management.

Major consumers fear the body will set output quotas like the oil cartel Opec but Russian officials have denied such plans.

Mr Putin's comments followed warnings from Russia Monday that gas supplies to Europe could be cut if Ukraine fails to resolve its payment row with Gazprom.

State-owned Gazprom claims it is owed around $2bn by Ukraine for gas supplies and said it will cut off supply to the country unless the situation is resolved by January 1.

Ukraine transmits 80 per cent of Russian gas exports to Europe via its pipelines and a similar dispute in 2006 led to an interruption of supplies across the continent.

Russia and Ukraine have been locked in a dispute over Kiev's failure to pay the entirety of its bill, in a row that has become an annual occurrence as the New Year approaches.

The first such dispute, in January 2006, saw state-run Gazprom cut all shipments to Ukraine, prompting a drop in supplies across Europe, which relies on Russia for a quarter of its gas imports. Around 80 per cent of Gazprom's supplies to Europe cross Ukraine.

The move was seen by the western media as politically motivated, as Gazprom sharply hiked prices months after the Orange Revolution ushered in a Western-leaning government in Ukraine.

The Ukrainian government has been torn by political instability for months, and the country has been one of the hardest hit by the financial crisis, requiring a $16.5 billion loan from the International Monetary Fund (IMF) in November.

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