Russia, Ukraine Reach Deal On Gas Supplies

A complex five-year deal was announced today after talks in Moscow between the heads of Russia's state-controlled natural gas monopoly Gazprom and Ukraine's state energy company Naftohaz. 

Ukraine will buy a mix of Russian and Central Asian gas from a Russian-Ukrainian joint venture for $95 per 1,000 cubic meters.

Ukrainian President Viktor Yushchenko said his country's economy would cope with the new prices, which are nearly double what Kyiv had previously paid.

Russian President Vladimir Putin welcomed the agreement, which takes effect immediately.

Speaking on behalf of the EU, Energy Commissioner Andris Piebalgs called the agreement vital if Russia and Ukraine are to remain "reliable and secure gas suppliers of Europe." He also said the dispute has had some lessons for Europe.

"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."

On 1 January, Gazprom cut off supplies to Ukraine after Kyiv refused to agree to a more than quadrupling in gas prices. Gazprom had originally demanded that Kyiv pay $230 per 1,000 cubic meters of gas. Ukraine previously paid just $50 for the same amount.

Ukraine is the main transit route for Russian gas to the Europe Union, and supplies were temporarily disrupted by the cutoff.

(Agencies)