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Ukraine announces deal with Gazprom over debt

Latest update : 2008-02-21

Russian gas supplier Gazprom and the Ukrainian government have reached an agreement over outstanding debts, lifting the threat of supply cuts, Ukraine's PM Yulia Tymoshenko (photo) said on Thursday.

Ukrainian Prime Minister Yulia Tymoshenko said Thursday she had reached a deal with Russian gas monopoly Gazprom over debts owed by Kiev for Russian natural gas, Interfax news agency reported.

"The debt for gas provided in 2007 is settled," the pro-Western prime minister told journalists upon her return to Kiev after a visit to Moscow.

Earlier in the day, Gazprom had said the two sides had failed to reach a deal, but that talks were to continue.

Tymoshenko said the Ukrainian government would endorse paying off the debt for the October-December 2007 gas supplies at a meeting on Friday, with payment to be made in a matter of days.

She also said she expected a deal to soon be reached on 2008 debt.

The deal reached involves Ukraine paying off the debt at a price of 130 dollars (88 euros) per 1,000 cubic metres, she said.

On February 12, President Vladimir Putin and his Ukrainian counterpart Viktor Yushchenko announced a deal in principle to avert a threatened gas cut-off over Kiev's debts, but the agreement had yet to be finalised.

Tymoshenko visited Moscow to settle the matter.

Yushchenko had accused Tymoshenko's government of failing to fulfil the agreement he reached with Putin, saying only a fraction of the 1.5-billion dollar (one-billion euro) debt had been paid back.

The dispute raised concern in European capitals as it echoes a gas pricing row in 2006 that led to gas disruptions across Europe after Gazprom cut supplies to Ukraine, the main transit route to the European Union.

Tymoshenko, who came to power in December last year, has vowed to root out what she regards as corruption in the two countries' gas relationship and wants to stop the practice of using intermediaries in gas deals.

Ukraine relies on Turkmenistan and other former Soviet republics in Central Asia for around three-quarters of its gas supplies, with the rest coming from Russia.

Date created : 2008-02-21