On Wednesday, "Russia and Ukraine on Wednesday agreed to a compromise over [natural] gas pricing that allowed both sides to save face in a bitter dispute," London's Financial Times reported....
RUSSIANS REACH DEAL ON SUPPLY OF GAS TO UKRAINE
By Thomas Catan (London), Tom Warner (Kiev), Neil Buckley (Moscow), Sarah Laitner (Brussels), and Bertrand Benoit (Berlin)
Financial Times (UK)
January 4, 2006
Russia and Ukraine on Wednesday agreed to a compromise over gas pricing that allowed both sides to save face in a bitter dispute that had threatened Europe's gas supplies and cast doubt on Russia's reliability as an energy supplier.
The complex five-year deal came after heavy pressure was applied by European states that had seen gas supplies fall by up to a third after Russia cut off supplies to Ukraine on Sunday.
Under the deal, Russia will be paid $230 (192 euros) per 1,000 cubic meters for the gas it exports to Ukraine -- up from the $50 it was paid until now. But, after mixing in gas supplies from the Central Asian states of Turkmenistan and Kazakhstan, Kiev will pay an average gas import price of only $95 per 1,000 cubic meters.
Russia said the agreement showed it could be trusted to supply gas reliably to Europe in the decades ahead.
Vladimir Putin, Russia's president, said the deal made its relations with Ukraine more "market-driven and transparent."
The deal came as a relief to European nations as crude oil prices slipped from two-month highs on the news. Many in Western Europe were shocked that gas supplies to countries such as France and Germany were held hostage to a dispute between Russia and its neighbor.
Deliveries of both Russian and Central Asian gas will now go through an intermediary, Ros-UkrEnergo, a joint venture between the banking arm of Gazprom, Russia's natural gas giant, and Raiffeisenbank of Austria. Raiffeisenbank holds the stake on behalf of unidentified ultimate owners.