Ukraine PM Signs Gas Debt Deal With Russia

MOSCOW, Russia -- Russia signed a deal on Tuesday with Ukraine over unpaid gas supplies after a week-long dispute revived fears of potential disruptions in gas deliveries to Europe later this year.

Russian Prime Minister Viktor Zubkov

The dispute erupted shortly after Ukraine's parliamentary elections and was interpreted by many analysts as an attempt by Moscow to put pressure on Kiev to form a government with a pro-Kremlin bent.

On Tuesday, Russian gas export monopoly Gazprom said it had reached a deal with Ukraine setting a repayment schedule.

Russian Prime Minister Viktor Zubkov said the amount of debt had been reduced to $1.2 billion from the initial $1.3 billion claimed by Gazprom.

He also told the state television Ukraine would partly redeem its debt by transfering some of its abundant gas stockpiles to Gazprom.

The breakthrough was reached at talks in Moscow with Ukraine's Prime Minister Viktor Yanukovich, whose party rivals the pro-Western camp led by ex-premier Yulia Tymoshenko for control in parliament and future government.

Moscow's relations with Kiev plunged to their low during Tymoshenko's brief term as premier in 2005 and analysts say the Kremlin renewed the gas dispute to indicate it wanted Yanukovich to retain a major role in a new government.

A similar pricing dispute between Gazprom and Ukraine led to gas cuts in Russian supplies to Europe in January 2006. Gazprom, the world's largest gas producer, covers one quarter of Europe's gas needs and sends 80 percent of these volumes via Ukraine.

The two sides have yet to agree on gas prices for 2008, when they are expected to rise from the current $130 per 1,000 cubic metres.

Gazprom does not sell gas directly to Ukraine and operates via a Russian-Ukrainian gas venture called RosUkrEnergo.

Analysts have repeatedly criticised the scheme for lack of transparency as RosUkrEnergo has never disclosed its full list of owners.

RosUkrEnergo's executive director Konstantin Chyuchenko said on Tuesday Ukraine will pay the first $200 million to RosUkrEnergo before Oct. 22.

Zubkov said Ukraine will transfer gas to Gazprom from RosUkrEnergo's stockpiles, but gave no details.

Source: Reuters