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.