With energy security a key them when the leaders of the world's leading industrialized nations set to meet in St. Petersburg on July 15-17, Putin told a Web conference that recent criticism of Russia's role as an energy supplier was unwarranted.
"We have been delivering natural gas to Europe for the last 40 years," Putin said. "There were no failures on any single day."
In May, U.S. Vice President Dick Cheney launched a virulent attack on Russia, saying it was using its vast energy sources as a means to blackmail and intimidate its neighbors and Europe. The charges came after energy giant Gazprom briefly cut supplies to Ukraine in early 2006 in a pricing dispute and then threatened to look to eastern markets if its European ambitions were thwarted.
But Putin said Ukraine had itself initiated the issue of market prices for gas but the two countries had failed to reach an agreement, which forced Gazprom to turn off the taps.
He added that a shortfall in gas supplies to Europe in winter was due to Ukraine's tapping the gas rather than Russia failing to honor its contractual obligations.
"That is why, and I want to turn your attention to this, we were forced to cut off supplies not to western Europe, but to Ukraine," he said. "And [our] Ukrainian partners knew very well what results could follow and we did not restrict our gas supplies to European consumers, but [our] Ukrainian partners, who started siphoning off [gas]."
But he said the complicated - "almost dramatic relations with Ukraine" - had provided positive results for European consumers.
"We have switched to market prices, which are set not by the Kremlin or the government," Putin said having added that the price formula for Ukraine was calculated just like it would be for any European consumer.
"This is the first positive result of our agreements with Ukraine," Putin said. "Now we must give Ukraine and personally President [Viktor] Yushchenko their due. They took a correct, courageous step, and now we have separated these issues: natural gas for Ukraine and a contract on the transit of gas to Europe, which is not connected with our agreements with Ukraine. This enforces the guarantees of reliable supplies to Europe."
However, on a negative note he accused Western media of whipping up hysteria around the dispute with Ukraine to exert political pressure on Russia, which was subject to intense criticism in the wake of the affair.
"Indeed, the hysteria kicked up in the media primarily in European countries and North America was an attempt to exert political pressure, not on Ukraine, but on Russia," he said.
Putin said the era of Russia in effect subsidizing its neighbors with cheap gas was over, but suggested the new epoch of market relations would only benefit consumers, especially those in Europe who started talking about diversifying supplies away from Russia after the Ukraine spat.
The president said that the Western consumers of Russian natural gas depended on transit agreements between Russia and Ukraine at the time, but at present the situation had changed drastically.
"We have agreed to separate these issues," Putin said. "No matter what agreements we have with Ukraine, if Ukraine fulfills its commitments, it will have to provide the transit of Russian gas to the European consumers for a long time."
The president said this approach would ensure the energy security of the European economy and households.
"These decisions improve the conditions of [natural gas] supplies to our consumers in Europe," Putin said, adding that the discussion of Russia's position on this issue the G8 meeting would help finding common solutions for energy security concerns.
The leaders of the United States, the United Kingdom, Japan, Italy, Germany, Canada and France will be joining Putin for Russia's debut summit.
