21 Jan 2009

Russian gas reaches Europe again via Ukraine

9:36 am on 21 January 2009

Russian gas reached Europe via Ukraine for the first time in two weeks on Tuesday.

Moscow and Kiev have ended a contract dispute that cut supplies to about 20 European countries.

Ukraine confirmed it was receiving gas from Russia and said it would deliver it to Europe as quickly as possible.

Gazprom said that under a new contract, Ukraine would pay $US360 per 1,000 cubic metres of gas (tcm) in the first quarter of this year - double the $US179.50 price that Kiev was paying in 2008.

Ukrainian Prime Minister Yulia Tymoshenko said she expected the average price over this year to be around $US230-250 per tcm, and that Ukraine would limit immediate purchases.

Russia provides about a quarter of Europe's gas requirements and pumps 80% of this via Ukraine.

Russia cut flows to Ukraine itself on 1 January after the two sides failed to agree a 2009 supply contract. Export flows to Europe through Ukraine also ceased six days later.