Russia and Ukraine Agree Gas Deal

Russia today agreed to resume gas shipments to Ukraine following a night of talks between officials from the two countries.

The heads of the Russian state energy company Gazprom and its Ukrainian counterpart, Naftogaz, announced the agreement of a five-year contract in Moscow.

Under the new deal, Gazprom will sell gas to a trading company, Rosukrenergo, for $230 (£131) per 1,000 cubic metres, with Ukraine buying gas from the company for $95.

Earlier, the Russian energy minister, Viktor Khristenko, had suggested the Ukrainians should pay $250 per 1,000 cubic metres.

"The talks ended successfully for Gazprom and Gazprom is completely satisfied," the company’s chief, Alexei Miller, said.

The breakthrough ends a dispute that had engulfed the Russian and Ukrainian governments and threatened long-term repercussions in Europe.

Russia stopped selling natural gas to its neighbor on Sunday as the price dispute reached a climax, and European customers reported a sharp falloff in gas supplies on Monday.

Around a quarter of Europe’s gas comes from Russia, with some 80% of that coming through pipelines crossing the Ukraine.

The two countries are also reported to have agreed an increase in the fees for gas transit paid by Russia to Ukraine for use of the pipelines.

Following increasing criticism, Russia increased the amount of gas going into Ukrainian pipelines late on Monday, and supplies in Europe appeared to be returning to normal.

Gazprom continued to accuse Ukraine of siphoning off gas intended for Europe, but Naftogaz said it had been using only Turkmen gas from Sunday. The state energy company then claimed Ukraine had not yet received any Turkmen gas this year.

On Tuesday, Downing Street called for the dispute to be settled "as quickly as possible".

Tony Blair’s official spokesman confirmed that UK gas supplies were not affected "in any substantial way", but added: "Clearly, we believe that it’s in the interests of everybody - not least Russia and Ukraine - that this matter is resolved as quickly as possible.

Today’s deal was reached just hours before the EU was due to hold emergency talks to discuss concerns over stable energy supplies, including those from Russia - the world’s second largest oil exporter.