Russia and Ukraine reached a face-saving deal today in a bitter gas dispute which hit supplies to Europe and cast doubt on Moscow's reliability as a safe supply source.
The European Union welcomed the five-year pact but still held talks to discuss energy security after the sudden reduction over the New Year of Russian deliveries, which cover a quarter of the continent's needs.
Gazprom Chief Executive Alexei Miller
The accord calms tensions between the ex-Soviet neighbours which peaked on Jan. 1 when Russia's state gas monopoly Gazprom cut deliveries to Ukraine to press its demand for a fourfold hike in export prices.
European consumers suffered a sharp, two-day drop in deliveries of Siberian gas pumped westward across Ukraine, before full pipeline pressure was restored.
"We have reached a final agreement," Gazprom Chief Executive Alexei Miller told reporters after crisis talks in Moscow with Ukrainian officials.
"This agreement will ensure stable supplies to Europe."
Details were sketchy, but Miller said the deal was effective from Jan. 1 and based on a price of $230 per 1,000 cubic metres of gas. That is up from the $50 Ukraine had paid under an existing cut-price deal.
But, after mixing in extra supplies from the Central Asian states of Turkmenistan and Kazakhstan, Kiev will pay an average gas import price of $95 per 1,000 cubic metres, both sides said.
Ukrainian Prime Minister Yuri Yekhanurov welcomed the deal but said his country would have to work to reduce its dependency on Russian gas.
"It was a serious lesson for us," he said in Kiev.