Moscow and Kyiv have signed a landmark agreement that will guarantee Russian gas deliveries to Ukraine throughout the winter despite tense relations over the fighting in eastern Ukraine.
The EU-brokered deal, which extends until March 2015, was signed at a ceremony in Brussels by the energy ministers of the two countries, Aleksandr Novak and Yuriy Prodan, and European Energy Commissioner Guenther Oettinger.
Outgoing EU Commission President Jose Manuel Barroso, who oversaw the signing, hailed the agreement, saying, "There is now no reason for people in Europe to stay cold this winter."
The hard-fought deal followed months-long EU-mediated negotiations between Moscow and Kyiv amid a long and bitter dispute over payments.
The agreement was reached after two days of marathon talks that had stalled before dawn on October 30 when Russia demanded that the EU first agree with Ukraine how to pay Kyiv's outstanding bills and finance gas deliveries through to March.
Oettinger said that under the accord, Ukraine will pay Russia $1.45 billion in gas arrears within "days" for Moscow to resume gas deliveries.
He said Russia will then "immediately" lower Ukraine's gas price by $100 from the $485 per 1,000 cubic meters that it had been demanding Ukraine pay.
Ukrainian Prime Minister Arseniy Yatsenyuk, in figures later confirmed by Moscow, said Ukraine would pay $378 per 1,000 cubic metres to the end of 2014 and $365 in the first quarter of 2015.
Kyiv will subsequently have access to Russian gas deliveries in exchange for prepayment, according to Oettinger. He said Ukraine also agreed to settle another $1.65 billion in arrears by the end of the year.
The deal is expected to include EU funding to help Ukraine pay off its debts to Russia's state-owned gas giant Gazprom.
Oettinger said, "we can guarantee a security of supply over the winter," not only for Ukraine but also for the EU member states closest to the region.
He added that the deal "is perhaps the first glimmer of a relaxation" between Ukraine and Russia.
Ukraine's Prodan said the "decisions taken today will provide energy security for Ukraine and the EU."
Moscow cut off gas deliveries to Ukraine in mid-June, citing a $5.3 billion debt and demanding that Ukraine settle its outstanding bills and pay up front for any future deliveries.
The dispute occurred amid Russia's conflict with Ukraine and Western sanctions imposed on Moscow for its annexation of Crimea in March and its subseqent military and political support for pro-Russian separatists in eastern Ukraine.
With Ukraine relying on Russia for around 50 percent of its gas, the onset of winter made the need for a deal more urgent.
Russia also provides about one-third of the European Union's gas, about half of which is pumped via Ukraine.
The EU was seeking to avoid a repeat of 2006 and 2009 when Russia halted supplies to Ukraine, disrupting deliveries to Europe during two very cold winters.
But Russia's Novak said after the signing that Moscow will remain a "reliable supplier" of energy to Europe and the deal struck with Ukraine will ensure stable gas deliveries over the winter.
In reaction to the deal, the French and German leaders said in a joint statement that the EU will "fully play its role" to implement the gas deal.
Francois Hollande and Angela Merkel said they had spoken with Russian President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko earlier October 30, and all four "have welcomed the conclusion of negotiations on the delivery of Russian gas to Ukraine, achieved thanks to the mediation of the European Union."
With reporting by Reuters, AP, and AFP