Russia, Ukraine reach deal to resume gas supplies to Europe

11:39 | 18/ 01/ 2009

MOSCOW, January 18 (RIA Novosti) – The prime ministers of Russia and
Ukraine said early on Sunday they had reached a deal that would allow
to restart gas supplies to Europe.

Russian Prime Minister Vladimir Putin said after the talks with his
Ukrainian counterpart Yulia Tymoshenko that Ukraine will pay the
European price for Russian natural gas with a 20% discount this year
while Kiev will not increase the current transit fees it receives for
Russian gas.

From 2010, Ukraine will pay the full market price for Russian natural
gas while Russia will pay European market pries for transit, Putin
said.

Ukraine paid $179.5 per 1,000 cubic meters for Russian natural gas in
2008, which is less than half the price paid by European consumers. The
European price for natural gas in the first quarter of this year stands
at about $450 per 1,000 cu m but is expected to fall significantly
later this year to reflect the decrease in world oil prices.

Tymoshenko said that the talks were uneasy. "But we had come to mutual
understanding, which makes it possible to sign all contract documents."

The premiers instructed Russian energy giant Gazprom and Ukraine’s
national gas company Naftogaz to prepare and sign a formal agreement.

"As soon as the documents are signed, all natural gas deliveries will
be restored," Tymoshenko said.

Russia suspended supplies to Ukraine on January 1 after the former
Soviet neighbors failed to agree on debt and prices for 2009. A week
later, Gazprom cut off gas supplies to the European Union, saying
Ukraine was stealing gas intended for EU consumers.

Following mediation by the EU, the two sides agreed to resume supplies,
but deliveries had not restarted, with each side blaming the other over
the impasse.

From: Emil Lazarian | Ararat NewsPress