Ukraine gas cuts averted

The gas dispute which threatened to see gas supplies cut to Ukraine has been averted. During a media conference in Moscow, the presidents of Russia and Ukraine announced that the deal has been reached. Ukraine will be covering its debt of $US 1.5 billion

Russia's energy giant Gazprom and Ukraine's state energy firm Naftogaz will set up a working group to develop scheme for future gas co-operation.

Gazprom chief Aleksey Miller was relieved to announce a deal had been reached, minutes before the Tuesday 6pm deadline.

“On Thursday the Ukrainian side will start paying its gas debt. We have also created two new companies to import and trade gas with Ukraine, both owned 50-50 by Gazprom and Ukraine’s Naftogaz,” he stated.

On Monday, the two companies had failed to settle the $US 1.5 billion Russia claims it's owed by Naftogaz. Gazprom had given Ukraine until 6pm Moscow time to reach a deal.

Tuesday's meeting between Vladimir Putin and Viktor Yushchenko in Moscow seems to have helped in settling the row.

“We agreed that starting Thursday Ukraine will start paying off its debt for November and December last year. That appeared because not all necessary documents for delivery had been signed,” Ukraine's President Yushchenko said.

“We assume that 2007 calculations are based on the 2007 price,” he said.

“Concerning the supplies of 2008, we’ve agreed that the basic price of $ US179 per cubic metre will remain the same,” he added.

President Putin, speaking about the possible impact that the dispute could have had on gas deliveries to Europe, noted that Ukraine and Russia share a responsibility to ensure stability.

“A significant export, oil and gas routes run through Ukraine. Not only Russia  and Ukraine are interested in fulfillment of the existing agreements, in the stability and predictability in this sphere.  This is an important factor of Europe’s energy security. Being the biggest European countries, Russia and Ukraine are responsible for the stability and security in Europe,” Putin said.