Gas Breakthrough
January 19, 2009
Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Julia Timoshenko were shown on Russian television presiding over the signing of a new contract on gas prices and transits between the two states' gas monopolies in Moscow.
Gas flows to Europe would resume "shortly" after the contract was signed, the two premiers said earlier.
The European Commission demanded to know exactly when Russian natural gas taps to Europe would be turned back on and said that monitors stood ready to verify supplies.
In a statement, the commission noted that Russia and Ukraine had earlier Monday signed a 10-year contract ending their gas dispute, clearing the way for a renewal of supplies through Ukraine to Europe.
"We now need an indication of the precise time that gas deliveries will be resumed. Our monitors will verify when the gas actually starts to flow," the EU's executive arm said.
Putin says EU observers no longer needed
However, Prime Minister Putin said European experts deployed to monitor gas supplies through Ukraine to Europe will no longer be needed due to the ending of the two countries' dispute. "No monitoring system is necessary as Ukraine will receive gas for its own needs," Putin said at the ceremony ending the two countries' gas dispute.
Both Putin and Timoshenko said the deal allowed for "subjective" issues to be sidelined from hindering their gas trade in the future.
Gas disputes between Russia and Ukraine have been a chronic end-of- year problem since 2005 when pro-Western leaders came to power in Ukraine in the so-called Orange Revolution.
Putin called the deal "a way out of the dead end" of the crisis that has disrupted gas flows to Europe since negotiations on a new contract broke down January 1.
The 10-year contract signed by Alexei Miller, the head of Russian gas export monopoly Gazprom, and Ukraine's Naftogaz head, Oleh Dubina, calls for both countries to switch to European market prices in their natural gas trade.
But Ukraine will pay at discounted prices of 20 per cent on deliveries this year in return for keeping transit fees at 2008 prices, Putin said.
Europe still made to wait for gas
Under the deal, the two-post Soviet countries will deal directly instead of trading though Swiss-based intermediary Rosukrenergo, which is 50 per cent owned by Gazprom.
Russia cut gas to Ukraine after it refused to pay a fixed price of 250 dollars - a huge increase on the $179.50 it paid last year.
Experts say even after the taps are reopened, it could take up to three days for gas flows to reach Europe and for pressure to return to normal in pipelines.
The European Union has been hard hit by the gas row since Russia cut all supplies via Ukraine on January 7, accusing Ukraine of stealing transits.
Roughly one quarter of all gas burnt in the EU comes from Russia, and 80 per cent of it passes through Ukrainian pipelines.