MOSCOW (dpa-AFX) - Russia has agreed to resume gas supplies to Ukraine under a $4.6 billion dollar winter package, which will also secure gas for the European Union as the cold season approaches.
The European Union has been mediating discussions to help find a sustainable solution to the dispute between Russia and Ukraine over gas pricing, supply and payment dues.
After seven rounds of negotiations in recent months, the major breakthrough came about at Thursday night's talks moderated by European Commissioner for Energy, Günther H. Oettinger, in Brussels.
Oettinger said 'This breakthrough will not only make sure that Ukraine will have sufficient heating in the dead of the winter. It is also a contribution to the de-escalation between Russia and Ukraine.'
European Commission President José Manuel Barroso, who witnessed the signing of the winter package, said he is delighted that he can announce a major success at the end of his mandate as President of the European Commission. 'With our strong support, Ukraine and Russia have today found agreement on their outstanding energy debt issues, and on an interim solution that enables supplies to continue this winter. I am glad that political responsibility, the logic of cooperation and simple economic sense have prevailed.'
Russian gas supply to Ukraine and gas deliveries via Ukraine into the European Union has long been under threat over a price dispute between the two countries, which escalated after Russia annexed Crimea in February.
EU depends on Russia for about one third of its total demand for natural gas, about half of which is pumped through Ukraine.
The winter package consists of two documents: A binding protocol, signed by Oettinger on behalf of the European Commission, Russian Energy Minister Alexander Novak and his Ukrainian counterpart Yuri Prodan; An addendum to the existing gas supply contract, signed by Alexey Miller - CEO of Russia's state-owned gas giant Gazprom -- and Andriy Kobolyev - CEO of Ukraine's state-owned gas company Naftogaz Ukrainy.
Under the agreement, Ukraine would settle its debts based on a preliminary price of $268.5 per 1,000 cubic meters by making payments in two tranches: $1.45 billion without delay, and $1.65 billion dollar by the end of the year. The final price and thus the final sum of debt will be determined through the pending arbitration by the Arbitration Institute of the Stockholm Chamber of Commerce between Gazprom and Naftogaz.
In future, Russia will deliver gas following advanced, monthly payments by Ukraine at a price below $385 per 1,000 cubic meters. This will be calculated according to a formula in the present contract and a price reduction through a discount in export duties by Russia. Ukraine is free to order as much gas as it needs and is not subject to take-or-pay obligations foreseen in the current contract. Ukraine plans to purchase 4 billion cubic meters of gas until the end of the year.
The European Commission has been working intensively with the International Financial Institutions (IFI) and Ukraine to help the latter pay in advance for gas deliveries in the coming winter. Unprecedented levels of EU aid will be disbursed in a timely manner, and the International Monetary Fund (IMF) has reassured Ukraine that it can use all financial means at its disposal to pay for gas.
The Commission said that further work with the IFIs on financial assistance to Ukraine, including for gas supplies, will still continue, but all three sides are reassured that Ukraine will have the necessary financial means.
Copyright RTT News/dpa-AFX