Oil Report

Russia's Gazprom says economy boosts gas demand

MOSCOW, March 4 (Reuters) - Head of Russian energy group Gazprom GAZP.MM said on Monday that demand for natural gas was rising not only due to an unusually cold winter across the European continent, but also because the economy is on the mend.

Gazprom has boosted gas production by more than 14 percent in January-February comparing with the year-earlier period when a pricing row with Ukraine led to a halt in Russian gas supply to Europe for about two weeks.

Harsh weather has increased gas usage this winter, but Gazprom’s CEO Alexei Miller said lower temperatures are not the only factor behind the reason consumers are craving for more fuel.

“Of course, there is a “credit” not only to the cold Russian and European winter, the healthy rise in demand is also due to a gradual revival of the economy,” Gazprom quoted Miller as saying in a statement.

On Thursday, VTB bank’s GDP Indicator showed the Russian economy returned to year-on-year growth in February for the first time since November 2008. A year ago, the economy was at the height of the crisis. [ID:nLDE6230D4]

There are also signs that Europe, the main source for Gazprom’s revenues, is getting out of the first recession in a decade albeit slowly.

But still Gazprom doesn’t expect gas demand to return to pre-crisis levels in the foreseeable future as it postponed several key projects including the giant Shtokman gas field development. (Reporting by Vladimir Soldatkin; Editing by Jon Loades-Carter)