Russia says Europe gas supplies to restart

January 20, 2009

, MOSCOW, January 20 – Russia said it would resume energy supplies to Europe via Ukraine at 0700 GMT on Tuesday, almost two weeks after Moscow\’s gas feud with Kiev cut supplies to a swathe of European countries amid a cold winter spell.

Russian energy giant Gazprom received an order to resume deliveries after Russia and Ukraine announced they had resolved what has become the worst energy crisis in European Union history and signed a 10-year contract for gas supplies.

"The transit will resume at 10.00 am local (0700 GMT)", Gazprom spokesman Sergei Kupriyanov told AFP.

Russia and Ukraine on Monday announced they had resolved the gas dispute, saying deliveries to European consumers would resume "soon."

Officials had previously said it would take at least 36 hours for supplies to reach Europe after the restart of the pipeline system.

But the European Union demanded to know exactly when natural gas flows would be restored after a crisis that left millions of people in eastern and central Europe without heating in the depths of winter.

Gazprom and Ukrainian gas supplier Naftogaz put pen to paper on a 10-year agreement to provide Russian gas for the Ukrainian market and said all disagreements on transit to the EU had been resolved.

"We expect the Russian side to start deliveries of gas to the countries of the European Union in a matter of hours," Tymoshenko said shortly after the ceremony.

The Ukrainian premier called Monday\’s agreement "historic" and said it would prevent future year-end gas crises.

"That is a formula-based approach which excludes any subjective elements and gives reason to believe there won\’t be year-end debates in future years, won\’t be any year-end falling out."

Russian Prime Minister Vladimir Putin expressed hope that "such approach "will allow us to build long-term, reliable and stable relations" with Ukraine and Europe.

The signing of the contract made front page news in Russia on Tuesday but some were sceptical that a final line had been drawn.

"When Ukrainian politicians speak so passionately about 10 years of calm, wait for trouble at the end of this week," Kommersant business daily said.

Ukrainian President Viktor Yushchenko\’s energy adviser, Bohdan Sokolovsky, on Monday criticized the deal, saying it favoured Russia.

Tymoshenko indicated that the price for gas for Ukraine would be based on the so-called "European formula" and it would be different during the year, but on average Ukraine would pay 230 dollars per 1,000 cubic metres.

"We hope to reach the level of 230 dollars per 1,000 cubic metres for the year", she said, adding that the price for the year 2010 would remain "10 percent" lower than the "market price".

The Ukrainian prime minister also said that Kiev had bought 11 billion cubic metres of technical gas which is necessary for maintaining the pressure in the pipes at the price of 167 dollars per 1,000 cubic metres.

The crisis erupted on January 1 when Russia cut gas to Ukraine\’s domestic market over unpaid debts and demands for a higher price in 2009. The dispute escalated when Moscow on January 7 halted all supplies for Europe transiting through Ukraine, accusing Kiev of stealing gas.

Russia supplies about one-quarter of the EU\’s natural gas and pumps 80 percent of this via Ukraine.

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