Gas supplies to Europe are in the clear after Ukraine and Russia struck a deal over unpaid gas supplies, yet further developments should be carefully watched, EU Energy Commissioner Andris Piebalgs said on Tuesday, according to Reuters.

Following a week-long dispute, Russian gas export monopoly Gazprom on Tuesday reached an agreement with Ukraine which set out a repayment schedule for $1.2 million.

"This issue is definitely settled," Piebalgs told reporters after giving a speech in Vienna. "Now we still have difficult times ahead, and also the price negotiations for next year."

A similar pricing dispute between Gazprom and Ukraine led to cuts in gas supplies to Europe in January 2006.

Gazprom, the world`s largest gas producer, supplies a quarter of Europe`s gas and ships 80 percent of it via Ukraine.

"We should be watching very carefully how developments are in December, January," said Piebalgs.