PRESIDENT PUTIN yesterday threatened to divert oil supplies away from Europe to the Far East in the long term if the Kremlin continued to be confronted with “excuses” and “limits” for its expansion plans in the West.

The Russian leader told a conference on Siberia’s development that Moscow was continually coming up against “unfair competition” on world energy markets.

“Despite the great demand for energy resources, any excuses are being used to limit us in the north, in the south, in the west,” he said.

“We must look for markets, fit into the processes of global development. I have in mind the countries of the Asian-Pacific region, which are developing at great speed and need to cooperate with us.”

In his most outspoken remarks on the issue to date, Mr Putin echoed similar threats from Gazprom, Russia’s state gas monopoly, and the state pipeline monopoly Transneft over the past week. He pointedly made the remarks just before meeting Angela Merkel, the German Chancellor, in the Siberian city of Tomsk for talks that are expected to focus on energy security.

For now, his threat is an empty one, since Russia does not have oil or gas pipelines connecting it to Asia and can only deliver limited supplies by rail. But on Friday construction work is due to start on a 2,550-mile pipeline linking Siberian oilfields for the first time to China and the Pacific coast. Once completed, by 2009, the pipeline is expected to carry 1.6 million barrels of oil a day to China, Japan, South Korea and other Asian markets.

Mr Putin’s uncompromising message set the stage for some tough negotiations before and during the Group of Eight leading economies’ July summit in St Petersburg, where the central theme will be energy security.

European leaders have been fretting about dependence on Russian energy supplies since Gazprom cut off supplies to Ukraine in January over a pricing dispute. Widely seen as punishment for Ukraine’s Orange Revolution, the act raised fears that the Kremlin was using its energy reserves as a political tool.

Britain, in particular, has been unnerved by Gazprom’s plans to take over Centrica, which supplies gas to 13 million UK homes, speculation about which lifted the British company’s shares 5 per cent yesterday. But Aleksei Miller, Gazprom’s chief executive, responded last week by threatening to ship gas elsewhere if his company’s European expansion plans were blocked.

Semyon Vainshtok, the head of Transneft, then made similar remarks in a newspaper interview this week. “We have overfed Europe with crude,” he said. “So far we cannot reduce supplies as all our exports are going to Europe. But as soon as we divert [flows] to China, South Korea, Australia, Japan, it will immediately take away crude from our European colleagues.”

Alexander Medvedev, the head of Gazprom’s export business, also laid into European leaders for undermining the security of gas supply with their efforts to liberalise the gas market.

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