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Ukrainian President Viktor Yushchenko (L) with British Prime Minister Tony Blair at an EU summit on 1 December 2005 (AFP)
4 January 2006 -- The European Union has welcomed an agreement between Russia and Ukraine to settle a bitter dispute over gas pricing which earlier this week hit gas supplies to Europe.
EU Energy Commissioner Andris Piebalgs said the agreement was vital if Russia and Ukraine were to retain their position as "reliable and secure gas suppliers of Europe".
He also said Europe must learn the lessons of the dispute and find alternative sources of energy.
"Europe needs a clear and more collective and cohesive policy of security of energy supply. Today the issue of security of energy supply is only really considered at the national member state level, but in reality we need a much greater, European-wide approach to this issue."
Austrian Economics Minister Martin Bartenstein said his government -- as current holder of the EU presidency -- would put energy issues on the top of the bloc's agenda for the next six months.
Earlier on 4 January, energy experts from the EU's 25 member nations held emergency talks in Brussels to discuss the impact of the Russia-Ukraine gas dispute on Europe's energy supplies.
Ukraine is the main transit route for Russian gas and the decision by Russia's state-controlled gas company Gazprom to cut supplies to Ukraine, which led to a temporary drop in deliveries to European customers, raised concerns about the vulnerability of the EU to Russian gas supplies.
Gazprom and its Ukrainian counterpart Naftohaz announced on 4 January that they had agreed on the price Ukraine is to be charged for Russian gas.
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- Ukraine consumes 70 billion cubic meters (bcm) of gas per year. It produces 20 bcm of its own gas, has a signed contract to import 40 bcm from Turkmenistan, and in 2005 was getting 29 bcm from Russia as payment for transit of Russian gas.
- Ukraine sells some 7 bcm of gas a year to the West and places some in underground storage facilities. These facilities can hold 34.5 bcm.
Ukraine is the sixth-largest consumer of gas
in the world and uses more gas than Poland, the Czech Republic, Hungary, and Slovakia combined.
- Russia has proven gas reserves of 47 trillion cubic meters (tcm) -- the largest in the world ahead of Iran and Qatar.
Russia sells approximately 160 bcm to Europe each year.
By 2015, Europe is expected to import 300 bcm, or 40 percent of its projected needs from Russia.
Russia's Gazprom is the world's largest gas company.
It is the only company allowed by Russian law to export gas outside the borders of the CIS. It also owns the gas-transportation system and most of the gas fields in Russia.
The Russian state is Gazprom's majority shareholder
, with a 51 percent share. The company's ownership rights changed as of the beginning of 2006, with Gazprom stock being sold on the open market. The Russian state, however, will continue to hold the majority stake.