Russia, Ukraine clinch deal to resume Europe gas supplies
2009-01-17

Nations Russia Ukraine City Moscow Category Regions Regions Europe Pacific Rim People Dmitry Medvedev Vladimir Putin Event 2008 Russia Gas Dispute Source (AFP)

MOSCOW (AFP) - Gas supplies to Europe will resume "shortly" after Russia and Ukraine clinched a deal Sunday to resolve their energy crisis in talks in Moscow, Russian Prime Minister Vladimir Putin said.

"Shortly the gas transit -- as the Ukrainian side assures us -- will be resumed," Putin said in comments shown live on Vesti-24 television following marathon negotiations with his Ukrainian counterpart Yulia Tymoshenko.

Tymoshenko said the Russian and Ukrainian energy companies had to draw up agreements by Monday and "immediately after those documents on transit and gas prices are signed, all transit of gas to Europe will be resumed.

"The talks were not easy but we have reached a mutual understanding that allows us to sign agreements," she added.

The agreement came after the European Union piled pressure on Russia and Ukraine, calling for an immediate resumption of supplies warning that it could review its relations with both countries unless a deal was struck this weekend.

Under the terms of the deal, Russia would grant Ukraine a 20-percent discount on Russian gas imports for 2009 as long as Ukraine keeps its tariffs for the transit of Russian gas to Europe at the 2008 level, Putin said.

"Starting from January 1, 2010, Ukraine and Russia will shift to European prices on gas and gas transit," Putin said, without giving any further details on prices that have been the subject of heated debate between Moscow and Kiev.

Putin spokesman Dmitry Peskov said he could not name the exact price.

Putin and Tymoshenko began their negotiations on Saturday -- the first face-to-face talks between the two governments since the start of their crisis on New Year's Day when Russia cut off supplies to Ukraine in a payment dispute.

Russia subsequently entirely cut off supplies to European customers transiting through Ukraine that account for around a fifth of the EU's total supply after accusing Ukraine of stealing the gas bound for Europe.

Ukraine vehemently denied this and accused Russia of stoking the crisis.

Russian President Dmitry Medvedev earlier said he was hopeful of a breakthrough after Kremlin talks on Saturday attended by Tymoshenko, EU envoys and senior officials from several European countries affected by the crisis.

"I want this to happen as soon as possible, literally in the next few days," Medvedev said, referring to the resumption of gas supplies to Europe transiting through pipelines in Ukraine that have now been entirely cut off for 12 days.

But the Czech EU Presidency said in a statement it was "not satisfied" with the result of the Kremlin talks and pressed for an agreement at the Putin-Tymoshenko talks later on Saturday on resuming supplies to Europe.

Swathes of central Europe and the Balkans have been left shivering by the crisis, with gas-fired central heating reduced or cut off for millions of people and schools and factories shut down because of the lack of supplies.

Earlier the EU said the talks in Moscow were the "last and best chance" to resolve a dispute between the two ex-Soviet states that European Commission President Jose Manuel Barroso said was "unacceptable and incredible."

A spokesman for the European Commission, Johannes Laitenberger, meanwhile said on Friday the 27-nation bloc would determine next week whether to continue "business as usual" with Moscow and Kiev if the weekend talks failed.

As she headed for Moscow, Tymoshenko said in a statement that she was confident of a deal but added she did not want "a knife in the back", apparently a reference to her rival, Ukrainian President Viktor Yushchenko.

The gas crisis has cost EU states hundreds of millions of dollars (euros) and set off alarm bells in European capitals about the security of Russian gas supplies as gas stocks in many EU states begin to run low.