Ukraine, Russia solve gas price row

KIEV: Ukraine and Russia reached agreement on Tuesday on a compromise gas price, opening the way to reduced tensions between the two countries and an easing of European concerns about the reliability of Russian energy supplies.

The Russian-Ukrainian companies RosUkrEnergo and UkrGaz-Energo signed a deal on deliveries of Russian natural gas in 2007 at a price of 130 dollars (103 euros) per 1,000 cubic metres, according to a joint statement.

 "We have reached agreement," Russian ambassador Viktor Chernomyrdin earlier told reporters in Kiev during a visit to the Ukrainian capital by Russian Prime Minister Mikhail Fradkov.

The price of 130 dollars per 1,000 cubic metres of Russian gas marks an increase on the current 95 dollars that Ukraine pays, but is less than a demand for 230 dollars per 1,000 cubic metres that the Gazprom energy giant had sought 10 months ago.

 When contacted a Gazprom spokesman declined to comment on the deal.  Ukraine and Russia's disagreements over gas have been at the centre of a crisis in relations and prompted Moscow to briefly cut off supplies to Ukraine at the start of this year, leading to knock-on disruption of supplies across Europe.

The question of gas prices is also a critical one for Russian-Ukrainian relations, as nearly all of Ukraine's energy imports come via Russia.

The recent problems have prompted greater attention to energy security on the part of European Union leaders, who  met with President Vladimir Putin last week in Finland to discuss the issue.

Eighty percent of Russian gas supplies to Europe pass through Ukraine.