Demand for natural gas shipped to Europe via pipelines will grow in the coming years, but growth will be hampered by higher energy efficiency measures and rising supplies of liquefied natural gas, Bernhard Reutersberg, chief executive of Germany's largest gas importer E.ON Ruhrgas, said Friday.

"There was an increase in demand in the first three months of the year relative to last year," said Reutersberg, speaking on the sidelines of the official launch of the construction of the Nord Stream pipeline, through which natural gas will be shipped from Russia to Germany under the Baltic Sea .

In comparison to recent years, however, demand is still at a low level, he added.

"There is an increase [in demand], but the question is how long will it last," Reutersberg said, adding that growth will primarily be driven by more demand for gas to power generation.

On the downside energy efficiency and carbon dioxide emissions abatement measures will dampen demand growth somewhat, Reutersberg added.

"Another factor is that indigenous production in Europe will go down, so this has to be covered from additional imports," he said.

"Some of this will come from Russia , some from LNG," Reutersberg added.

Reutersberg also said that OAO Gazprom (GAZP.RS) hasn't approached E.ON Ruhrgas, a fully owned unit of German utility E.ON AG (EOAN.XE), about further upstream projects in Russia .

Gazprom has previously approached western companies over possible joint gas production projects on the Yamal peninsula, a gas-rich region in Siberia .

"We are in talks on several projects but not on Yamal," said Reutersberg.

E.ON Ruhrgas owns a stake of 25% minus one share in Gazprom's giant western Siberian gas field Yuzhno Russkoye. Gazprom is majority owner with a stake of 50% and operates the gas field. Wintershall AG, the upstream oil and gas unit of German chemicals company BASF SE (BAS.XE), owns 25% minus one share in Yuzhno Russkoye, but holds 35% economic interest.

E.ON has said it aims to obtain about 6 billion cubic meters from the Russian field yearly, or about 60% of its annual gas production target of 10 bcm.
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