Russia, Ukraine strike 5-year gas deal

Russia and Ukraine struck a five-year gas supply deal on Wednesday after a bruising pricing dispute in which Moscow curtailed deliveries, hitting supplies to European consumers.

Alexei Miller, chief executive of Russian gas monopoly Gazprom, told a news conference the deal was effective from January 1 and would be based on a price of $230 per 1,000 cubic metres.

A Ukrainian worker operates valves at the main pipeline in the village of Boyarka, near the capital Kiev, January 3, 2006. [Reuters]

"We have reached a final aGREement. It is successful for Gazprom and we are satisfied," Miller told reporters after talks with Oleksiy Ivchenko, head of Ukrainian state energy company Naftogaz.

"This aGREement will ensure stable supplies to Europe."

But Ivchenko said Ukraine would be buying gas at the Russian border at $95 per 1,000 cubic metres.

Pipes and a pressure gauge are seen at the Solokhovskoe gasfield near the city of Poltava, 330 km (198 miles) east of Ukraine's capital Kiev, January 3, 2006. [Reuters]

"We have reached an inititally acceptable aGREement which gives us the possibility to meet the gas needs of Ukraine and the transit of Russian gas to Europe," Ivchenko said at the news conference.

A Gazprom source said the $230 price would apply only to exports of Russian gas to Ukraine, up from $50 now. Under a complex deal, Ukraine would be able to buy gas from Turkmenistan and Kazakhstan, piped via Russia, at a cheaper price of $95 per 1,000 cubic metres.