Russia, Ukraine agree on gas deal

Russia’s Vladimir Putin, left, and Ukraine’s Yulia Tymoshenko meet on the gas crisis on Saturday in Moscow.

Associated Press

Russia’s Vladimir Putin, left, and Ukraine’s Yulia Tymoshenko meet on the gas crisis on Saturday in Moscow.

MOSCOW — The prime ministers of Russia and Ukraine announced a deal early today to settle the gas dispute that has drastically reduced supplies of Russian gas to Europe for nearly two weeks.

Russian Prime Minister Vladimir Putin said Ukraine will pay 20 percent less than the European price for the gas this year. This means a substantial increase for Ukraine in the first quarter but the price could fall significantly later in the year as gas prices are expected to drop.

Ukraine Prime Minister Yulia Tymoshenko said natural gas supplies would resume once the two countries' gas companies sign a contract. It was not clear how soon this would happen. Russia's Gazprom and Ukraine's Naftogaz, both state controlled, were told to prepare the documents.

The two leaders reached the agreement in talks that stretched into the early hours of the morning after a meeting Saturday with leaders from the 27-nation European Union ended without a resolution.

The EU normally receives about one-fifth of its gas supplies through Ukraine. Nations in Eastern Europe that rely on Russia have been left with virtually no new supplies.

The EU threatened to review its relations with both countries if their dispute is not resolved this weekend. EU spokesman Ferran Tarradellas said Saturday the EU delegation was "encouraged by the discussions" because Russia and Ukraine were seeking solutions.

Ukraine paid $179.50 per 1,000 cubic meters of gas in 2008, less than half the price paid by European countries. The European price for the first quarter of 2009 is about $450 but is expected to fall to reflect the decline in world oil prices.

Before talks broke down on Dec. 31, Russia had offered Ukraine a price of $250 for 2009, which Ukraine refused.

The two countries also reached a deal today on the price Russia will pay Ukraine for transporting gas to Europe through its pipelines. Ukraine had insisted that if it paid more for gas, Russia should pay market prices for transit.

But Putin said today the discounted transit price would remain in place for 2009. Beginning on Jan. 1, 2010, however, Ukraine will pay full price for gas and Russia will pay market prices for transit, he said.

Russia stopped shipping gas to Ukraine for domestic use on Jan. 1 when the countries could not agree on a price. It then accused Ukraine of siphoning off gas bound for Europe and turned off the taps entirely on Jan. 7.

Russia, Ukraine agree on gas deal 01/17/09 [Last modified: Sunday, January 18, 2009 12:19am]

    

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