She said: "I am of the opinion that controversial issues can only be addressed in dialogue and through dialogue".
"In 2017, we delivered 53.8 bln cubic meters of gas, which covers more than 30% of the German market, while the consumption of Russian gas is constantly growing and this year it increased by 13%", he said.
Speaking to the press on Friday, Mrs Merkel said she would like to discuss the possibility of a meeting on Syria with other North Atlantic Treaty Organisation partners, but that "no specific results are expected" from Saturday's working meeting.
Russia's Nord Stream-2 gas pipeline project will be among major energy issues up for discussion by the two leaders.
Putin noted that Germany is not only a market for the supply of hydrocarbons from Russian Federation, but also an important link in their transit to other European countries. They do not plan to take questions.
Mr. Putin presented the bride with flowers and presents and went on to dance with her at the event in southern Austria near the border with Slovenia.
"It's a working meeting from which no specific results are expected - but the number of problems that occupy us - from Ukraine and Syria to the issue of economic cooperation - is so big that it is justified to be in a permanent dialogue", Merkel said.
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I think he's not ready now for 90 minutes, but maybe, tomorrow, for the first 30 or the last 30 minutes he could be used. In that 15 minutes we were not able to do this. 'In the first half we are creating chances and for that I am happy.
Putin stressed that Nord Stream-2 is "an exclusively economic project, and it does not close off the possibility of continuing transit supplies of Russian gas through the territory of Ukraine".
The United States and some European countries have criticized the pipeline, saying it could increase Europe's energy dependence on Russian Federation, harm Ukraine - now a major gas transit country - and pose an environmental risk.
"As for Ukraine, we will also discuss the transit of gas".
With protesters audible Saturday outside the guesthouse in Meseberg, Putin also raised the issue of humanitarian aid and funding for worldwide reconstruction in Syria.
Austrian opposition politicians had criticised the invitation to Putin saying it undermined Austria's claim to be an "honest broker" between Europe and Russian Federation, with the Green party calling for Kneissl's resignation.
Russia and the West remain at loggerheads over Moscow's annexation of the Crimea region of Ukraine in 2014 and the ensuing conflict between Russian-backed separatists in the country's east and the Ukrainian army. Merkel said a four-way meeting on Syria involving Germany, Russia, Turkey, and France is possible. "For that he has to move", he said.
Merkel said she and Putin would discuss the prospects of a United Nations peacekeeping mission in eastern Ukraine.