Russia and Ukraine Reach Agreement on Gas

The Prime Ministers of Russia and Ukraine, Vladimir Putin and Yulia Tymoshenko, reached a framework agreement in Moscow early on Sunday regarding the resumption of gas supplies, which is expected to occur soon, reported the spokesman for the Russian government, according to agencies.

After marathon negotiations that lasted all Saturday and into the early hours of Sunday, Putin and Tymoshenko agreed that Ukraine would pay the market price for Russian gas, reduced by 20 percent this year, said Dmitry Peskov. This means that this year Ukraine will pay about $350 instead of the previously privileged $179 per thousand cubic meters of Russian gas. Ukraine had previously claimed in negotiations that it could pay between $200 and $210 as there is not enough money in the budget for larger increases.

From January 1, 2010, Ukraine will pay the full market price, and in return, Russia will start paying Ukraine the market value of transit fees for the use of Ukrainian gas pipelines from the same date. The two officials did not mention Ukraine’s debt of $600 million to Russia, which had also been cited as one of the problems for the cessation of supplies. The Prime Ministers of the two countries instructed the heads of their state companies, Gazprom and Naftogaz, to draft an official contract, and as soon as it is signed, gas supplies to Europe via Ukraine will be resumed, Peskov said. “This will happen in the very near future,” he added. What some analysts see as a potential problem is Yulia Tymoshenko’s authority to sign such an agreement, or the possibility that President Viktor Yushchenko could block it. He spoke out on Saturday evening and said that Tymoshenko has a full mandate for negotiations.

The conflict between Moscow and Kyiv over gas prices escalated at the beginning of the year into a complete halt of Russian gas supplies through the Ukrainian pipeline network, including parts intended for European consumers. The Russian-Ukrainian gas dispute particularly affected Central and Southeastern Europe. Among EU countries, Slovakia and Bulgaria felt the hardest consequences, while among candidate countries, Macedonia and Croatia were affected, and outside that circle, Serbia, Bosnia and Herzegovina, and Moldova. The Czech EU presidency and the European Commission have recently been intensively involved in attempts to overcome the gas crisis. The EU purchases about a quarter of its required natural gas from Russia, of which 80 percent is supplied through Ukrainian pipelines. (Hina)