Ukraine has agreed to pay off a $169.6 million gas debt it owes to Turkmenistan by August, Turkmenistan`s Foreign Ministry said in a statement on Sunday, according to Reuters.

Officials from the two sides last week signed an agreement on the payment timetable for the debt, which Ukraine owes Turkmenistan for gas deliveries from 2003 to 2005.

Ukraine will pay off the debt with cash and goods, mainly pipes, the ministry said.

"The currency part of the debt owed by the Ukrainian side will be paid off in the nearest future, and the delivery of goods to pay off the debt by August 10, 2006," it added.

Ukraine and Turkmenistan, Central Asia`s largest natural gas producer, have been bickering over Kiev`s gas debts for months, threatening a long-term gas contract that the two sides are due to sign.

Turkmenistan relies on Russian state controlled gas giant Gazprom to pipe its gas to foreign customers