Tue, January 20, 2009
World > Europe > Russia-Ukraine gas row

Russia, Ukraine sign new gas deal

2009-01-19 16:01:53 GMT2009-01-20 00:01:53 (Beijing Time)  Xinhua English

Russian Premier Vladimir Putin (R) and Ukrainian Prime Minister Yulia Tymoshenko shake hands during the signing ceremony in Moscow, capital of Russia, Jan. 19, 2009. Russia and Ukraine signed a contract on supplying gas to Ukraine over the next 10 years. (Xinhua/Shen Bohan)

Russian Premier Vladimir Putin (3rd L), Ukrainian Prime Minister Yulia Tymoshenko (1st L), Russian Gazprom CEO Alexey Miller (4th L) and Ukrainian Naftogaz chief Oleg Dubina (2nd L) attend the signing ceremony in Moscow, capital of Russia, Jan. 19, 2009. (Xinhua/Shen Bohan)

Russian Premier Vladimir Putin (Front R) and Ukrainian Prime Minister Yulia Tymoshenko (Front L) attend the signing ceremony in Moscow, capital of Russia, Jan. 19, 2009. (Xinhua/Shen Bohan)

MOSCOW, Jan. 19 (Xinhua) -- Russia's energy giant Gazprom and its Ukrainian counterpart Naftogaz Ukrainy signed a new gas deal here on Monday, paving the way for resuming Russian gas supplies to Ukraine and Europe.

Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Yulia Tymoshenko were present at the signing ceremony at the White Palace, the Russian government's compound in downtown Moscow.

The new agreements include a contract to supply gas to Ukraine and a contract for gas transit, which are both long-term for 10 years, Putin said, noting the Russian gas supplies to Europe via Ukraine could resume soon.

"I hope all the gas transits to Europe will be resumed within the next few days and Gazprom has received an order to resume exports along all the routes and to fully meet the European customers' daily needs," Putin said after the signing ceremony.

Tymoshenko, describing the terms of the contracts as "very favorable for Ukraine," said they could avoid the repeat of the annual disputes in the future and Russian gas will be delivered to Europe as soon as it enters Ukrainian pipelines.

"The agreements signed in Moscow exclude subjective approaches and give us reason to believe that there will be no debates or tensions in the following years and that the process of setting gas prices will be normal and predictable," she said.

Under the new agreements that was announced by Putin and Tymoshenko on Sunday, Russia will sell Ukraine gas at a price "based on the European price formula," but will offer a 20-percent discount for 2009. In return, Ukraine agreed not to raise its transit fee for Russian gas supplies to Europe.

The Ukrainian government will announce the exact price of Russian gas for Ukraine according to the formula in one or two days, said Tymoshenko.

The price, which will be calculated on a quarterly basis, will be 360 U.S. dollars per 1,000 cubic meters in the first quarter of2009, Interfax cited Ukrainian presidential energy security commissioner Bohdan Sokolovsky.

Such a price, however, will "fall radically" in the second and third quarters thanks to the drop of price in the world energy market, Tymoshenko noted.

Russia cut off gas supplies via Ukraine to Europe on Jan. 7, one week after it halted gas supplies to Ukraine due to failed talks on pricing and terms of transit.

When the gas talks between Moscow and Kiev began in late December, Russia offered a gas price of 250 U.S. dollars per 1,000cubic meters for Ukraine in 2009 with transit fees for gas to Europe remaining unchanged.

Ukraine rejected Russia's "preferential price," saying it could only afford 201 dollars per 1,000 cubic meters of gas, and instead demanded that transit fees be raised from 1.7 dollars per 1,000 cubic meters per 100 km to more than two dollars.

The talks collapsed and Gazprom shut off gas supplies to Ukraine but offered a new price: the same as European market price of 450 dollars per 1,000 cubic meters in 2009, much higher than the 179.5 U.S. dollars price in 2008.

The state-owned Russian gas monopoly reopened its gas taps to Europe on Jan. 13 under a three-way agreement signed by the European Union, Ukraine and Russia, but no gas has reached Europe.

Moscow accused Kiev of blocking the gas flow, while Ukraine argued that Russia's choice of the gas transit route was technically "unacceptable" as it would require Ukraine to cut domestic consumers out before it could deliver gas to the Balkans.

Russia supplies a quarter of EU's gas needs, with 80 percent of it sent through Ukrainian pipelines.

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