Ukraine and Russia agree on gas price

Ukraine and Russia have reached agreement on a compromise gas price, opening the way to reduced tensions between the two countries and an easing of European concerns about the reliability of Russian energy supplies.

    The agreement eases tensions between Russia and Europe

    Viktor Chernomyrdin, the Russian ambassador, told reporters on Tuesday: "We have reached agreement."

    The question of gas prices is a critical one for Russian-Ukrainian relations, as nearly all of Ukraine's energy imports come via Russia, and 80% of Russian gas supplies to Europe pass through Ukraine.

    The price Chernomyrdin announced of $130 for 1,000 cubic metres of Russian gas marks a sharp increase on the current $95 that Ukraine pays.

    However, the spike is considerably less than a demand for $230 for 1,000 cubic metres that Russian gas giant Gazprom had sought 10 months ago, sparking a serious political crisis and a brief cut-off in supplies to Ukraine, with a knock-on effect felt throughout Europe.



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