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Russia, Ukraine Reach Temporary Gas Deal


FILE - A pressure gauge, pipes and valves are pictured at a compressor station on the East Poltava gas field near Kovalivka, Poltava region, Ukraine.

Russia, locked in a bitter standoff with Ukraine over a pro-Russian rebellion in Ukraine's east, has agreed to resume natural gas deliveries to its neighbor, in a deal brokered by the European Commission.

The agreement, announced Thursday in Brussels, blunts the threat of severe gas shortages in energy-dependent Ukraine as the predictably harsh Eurasian winter approaches.

The deal, which requires Kyiv to make monthly payments in advance of delivery, is set to expire in March 2015. Ukrainian Energy Minister Yuri Prodan told reporters the agreement allows his country to purchase gas at $378 per 1,000 cubic meters until the end of the year, while paying $365 between January and March of next year.

Russia cut off gas supplies in June over what it said were Kyiv's payment arrears of about $5 billion. The debt has since been reduced to $3.1 billion, which officials say will be paid in two installments by the end of the year.

Moscow had demanded prepayment to restart winter gas supplies, while Kyiv has said it was seeking to raise more money internationally to pay the arrears.

The European Commission is considering Ukraine's recent request for a new EU loan of about $2.5 billion.

Russia's natural gas giant Gazprom stopped supplies to Ukraine in 2006 and 2009 over pricing disputes, leaving homes and businesses in parts of central and eastern Europe without heat. Both cutoffs, resolved within weeks, forced industrial consumers to ration supplies.