Russia, Ukraine sign deal on gas supply

Russia and Ukraine signed a 10-year gas supply deal on Monday to clear the way for the resumption of supplies to a freezing Europe, cut off for nearly two weeks by a dispute between the ex-Soviet states.

Ukraine will buy Russian gas in 2009 at a 20% discount compared with European market prices, Russian Prime Minister Vladimir Putin said at the signing ceremony.

The deal was signed by the chief executive of Russian gas export monopoly Gazprom, Alexei Miller, and the head of Ukrainian state energy firm Naftogaz, Oleh Dubyna. The exact price was not disclosed.

“Gazprom received an order to start deliveries through all routes indicated by our Ukrainian partners and in full volumes,” Putin told a joint news conference with his Ukrainian counterpart, Yulia Tymoshenko.

Tymoshenko, who flew back to Moscow to attend the ceremony after clinching a weekend deal with Putin, said gas transit to Europe would resume as soon as Russian gas reached Ukraine.

Gazprom had previously said gas supplies would resume immediately after the signing. It will take about 36 hours for the first Russian gas to cross Ukraine and enter Europe.

The wrangle between Moscow and Kiev enraged the European Union and brought into question the credibility of Russia and Ukraine as gas suppliers to Europe.

Russia cut supplies to Ukraine on January 1 because Kiev would not pay higher prices for its gas.
Six days later, export flows to Europe through Ukraine ceased amid Russian accusations that Kiev was “stealing” gas intended for export.

Ukraine’s pro-Western leaders denied that, and countered that Moscow was trying to blackmail European customers by halting gas supplies.

Ukraine, heading into its worst recession in a decade, said it could not afford to pay higher prices. Analysts forecast its economy will shrink by up to 5% this year.

Ukraine and Russia have also agreed not to use intermediaries in their gas trade, Putin told reporters on Monday. Previous deals have been complicated by the use of Swiss-based intermediary Rosukrenergo, an opaque 50-50 joint venture between Gazprom and two Ukrainian businessmen.—Reuters

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