MOSCOW, Jan 4 (AFP): Russia and Ukraine announced a breakthrough accord today ending a bitter dispute over natural gas pricing and designed to guarantee supplies to Kiev as well as to the lucrative European market.
After talks in Moscow, officials from Russian energy giant Gazprom and its Ukraine counterparts Naftogaz said they had agreed on a five-year deal under which Kiev will buy gas at a rate of 95 dollars per 1,000 cubic metres.
The news was announced by Alexei Miller, the head of the state-controlled Gazprom group, and takes effect immediately.
The accord settles a dispute that saw deliveries to Ukraine cut off Sunday, a move which had the knock-on effect of reducing supplies to the key European market which relies on Russia for a quarter of its gas needs.
The price is nearly double the Soviet-era tariff of 50 dollars per 1,000 cubic metres that Ukraine currently pays, but far below the 230 dollars that Gazprom had been demanding.
Under the deal, the amount Russia pays Ukraine for transiting gas to Europe will rise by 47 per cent.
Gazprom controls a third of all global natural gas reserves, and the vast majority of deliveries to Europe-where Germany is the biggest importer and France, Poland and Italy also reliant on it-pass through Ukraine.
After Europe reported reduced supplies Monday of up to 40 per cent, Gazprom promise to restore full deliveries, and most importers said Tuesday that gas was now flowing normally again.
Nevertheless, the dispute has exposed Europe's reliance on Russian gas, a strategic energy question to be addressed at a European Union experts' meeting Wednesday in Brussels called in response to the supply crisis.
Officials from Gazprom and Naftogaz were due to join those talks, whose aim is to coordinate a Europe-wide response to threats on its energy resources.
The Ukrainian delegation arrived late Tuesday in Moscow amid a war of words, with Gazprom accusing Kiev of siphoning off gas destined for Europe, a charge that was strongly denied.
The European Commission, the bloc's executive arm, had called on both sides to return to the negotiating table, voicing concern as the dispute threatened to affect gas supplies across Europe.