Russia gas supply for Europe restarted

13:10, 20 January 2009
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Supply of Russian natural gas...

Supply of Russian natural gas piped to Europe through Ukraine resumed Tuesday, officials said, almost two weeks after a feud between the two ex-Soviet giants cut gas to a swathe of the continent during a winter freeze, according to AFP.

"The transit of Russian gas to Europe via Ukraine, and shipment of gas to Ukrainian customers, were started in accordance with the agreements" reached during the weekend, Russian gas giant Gazprom announced in a statement.

In Kiev, a spokeswoman for Ukrainian pipeline operator Ukrtransgaz told AFP that Russian gas was flowing into Ukrainian pipelines and would be forwarded to Europe.

"The gas has arrived on Ukrainian territory," said spokeswoman Inna Koval, adding that it would take about two hours to equalise pressure on the two sides and that once this was complete "we will be able to resume transit."

There was no sign yet of gas reaching downstream customers in Europe, but Austrian oil and gas giant OMV said in a statement that it expected deliveries of Russian gas to start arriving in Austria via Ukraine "shortly."

The flow of gas suggested an imminent end to the European Union`s worst-ever gas crisis, which has left millions of people in eastern and central Europe without heating in the depths of winter.

Meanwhile Gazprom confirmed that Ukraine had agreed to a major price hike -- at least in the short term -- in a contract signed Monday in Moscow that resolved the two countries` dispute.

"In the first quarter of 2009, the price of gas for Ukrainian customers will be 360 dollars per 1,000 cubic metres. The price will change quarterly under the formula," Gazprom said in a statement.

Last year Ukraine paid 179.50 dollars per 1,000 cubic metres of gas, much lower than countries in the European Union.

Europe currently pays around 450 dollars for the same quantity of Russian gas, but the price is expected to fall dramatically later this year due to the global economic slowdown.

Russia and Ukraine said Monday they had signed a 10-year contract for gas supplies, resolving their dispute and saying deliveries to European consumers would soon resume.

Gazprom and 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.

Ukrainian Prime Minister Yulia Tymoshenko called Monday`s agreement "historic" and said it would prevent future year-end gas crises.

Tymoshenko indicated that the price for gas for Ukraine would be different during the year, but on average Ukraine would pay 230 dollars per 1,000 cubic metres.

Russian Prime Minister Vladimir Putin expressed hope that the 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.

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. Kiev denied the allegation.

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

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