Russia, Ukraine resolve gas supply disputes

By RIA Novosti

Moscow : Russian natural gas giant Gazprom Thursday signed a deal with Ukrainian energy company for direct gas deliveries to the latter for the current year abolishing a much-debated system of intermediaries.

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The agreement, that ended a recent row between the two countries threatening a potential energy crisis in Europe, came after two days of talks between the heads of Russian entity and Ukraine’s state-owned oil and gas company Naftogaz, and was welcomed in the European Union, which buys a quarter of its gas from Russia via Ukraine’s pipelines.

Until now the Russian company had sold gas to monopoly exporter RosUkrEnergo, partially owned by Gazprom, via Ukrainian monopoly importer UkrGazEnergo, half-owned by Naftogaz, and on to the Ukrainian state energy company.

The scheme was criticized by Ukraine’s Prime Minister Yulia Tymoshchenko, who called it corrupt and non-transparent.

The system of intermediaries had given rise to serious controversy over payment with Russia demanding that Ukraine owed to it some $600 million as gas price. Kiev denied payment default and ascribed it to middlemen. Russia had drastically slashed gas supplies through Ukrainian pipeline in the wake of the controversy.

Under the agreement, Ukraine will get at least 49.8 billion cubic meters of Central Asian gas at $179.5 per 1,000 cubic meters (cu m) from March until December 2008, Gazprom said.

The deal also guarantees Gazprom subsidiaries and affiliates direct gas sales to Ukraine of at least 7.5 billion cu m from April 1 to the end of the year.