MOSCOW, May 19 (Reuters) - Russian gas producer Gazprom will raise production this year but has slowed construction of its Power of Siberia pipeline set to serve China from 2018, Deputy Chairman Vitaly Markelov said on Thursday.
Gazprom plans to produce 452.5 billion cubic metres (bcm) of natural gas in 2016, up from 418.5 bcm last year, Markelov said.
It plans to increase gas condensate output to 15.8 million from 15.3 million tonnes in 2015.
Demand fell last year as a conflict with Ukraine over Moscow's annexation of Crimea and other differences saw Kiev turn to Europe for gas. Kiev has said it may not buy any Russian gas this year.
Gazprom has also faced increased competition in Russia from Novatek and Rosneft, with its pricing policy constrained by government-imposed tariffs.
With the European Union looking to curb its reliance on Russian energy imports, Gazprom has begun work on a pipeline to China with a view to shipping 38 bcm of gas per year, which would make China its second-largest customer after Germany.
Gazprom currently only pipes gas to Europe.
Markelov said of Power of Siberia's approximately 3,000 km of pipeline to be built, 115 km was complete and another 400 km was planned for this year.
Gazprom had earlier said it aimed to complete around 800 km of the link this year.
"We have cut back expectations of construction due to costs optimisation," Markelov said, but added that the pipeline's 2018 launch had not been altered.
(Reporting by Vladimir Soldatkin; writing by Alexander Winning; editing by Dmitry Solovyov and Jason Neely)
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