Russian gas output collapse deepens in April

MOSCOW (Reuters) – Natural gas production at Russian gas giant Gazprom fell by a more than a quarter last month to the lowest levels in a decade, continuing its spiral downward in response to plummeting European demand.

Oil extraction, however, continued to climb in April despite concerns that the lower oil price and lagging investment would lead to a repeat of last year’s decline, data from the Russian Energy Ministry showed on Saturday.

In April, Gazprom’s gas output was 1.15 billion cubic metres (bcm) per day, 7 percent down from 1.24 bcm in March 2009 and 28 percent down from 1.60 bcm in April 2008, the data showed.

Analysts say such low production levels have not been seen in a decade, but they predict a recovery in the second half when gas prices are expected to catch up with the lower oil price, which they follow after a lag of six to nine months.

For now, cash-strapped consumers are delaying purchases until gas is cheaper, and switching to alternative fuels.

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