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Russia and Ukraine reach gas deal

The deal over gas supply runs until March 2015
The deal over gas supply runs until March 2015

Russia, Ukraine and the EU signed a gas supply deal in Brussels to ensure Ukraine receives gas from its neighbour over the winter.

The deal extends until March 2015, the spokeswoman said as the energy ministers of the two countries and European Energy Commissioner Guenther Oettinger signed the documents. Heads of the two neighbours’ gas companies signed a separate document.

The deal is perhaps the first sign of an easing of tension between the two countries, Mr Oettinger said.

"This is perhaps the first sign of a wise and well-functioning neighbourhood policy and is perhaps the first glimmer of a relaxation in the relationship between the two neighbouring countries," he told a news conference after the accord was signed.

Outgoing European Commission President Jose Manuel Barroso, who witnessed the three-way signing ceremony in Brussels as he prepares to leave office tomorrow, said: "There is now no reason for people in Europe to stay cold this winter."

Talks had earlier been broken off when Russia sought more guarantees from the EU that it would help Ukraine pay for its natural gas.

EU officials said both Russia and Ukraine had bargained hard, with Russia looking for EU cash to help Ukraine pay off debts to Gazprom and the Ukrainian authorities anxious to get a deal that they could present to domestic voters as not over-paying for vital Russian supplies.

Ukrainian Prime Minister Arseny Yatseniuk said in Kiev that the EU had agreed to serve as guarantor for Kiev in holding Russia to an agreement, notably on the price Ukraine would pay.

Mr Yatseniuk, in figures later confirmed by Russia, said Ukraine would pay $378 per 1,000 cubic metres to the end of 2014 and $365 in the first quarter of 2015. He said Kiev was ready to pay off debts for gas immediately after any deal was signed.

A total of $1.45 billion would be paid immediately and a further $1.65 billion paid by the end of the year, he said.

Russian Energy Minister Alexander Novak insisted that Ukraine would still have to pay up front for new deliveries to see its 45 million people through winter. Moscow expects some $1.6 billion for gas to be supplied.