Russia, Ukraine Secure Gas Delivery Deal

Russia, Ukraine Secure Gas Delivery DealRussia, Ukraine Secure Gas Delivery Deal

Russia and Ukraine reached an agreement to ensure natural gas supplies to war-torn Ukraine for the month of March, averting possible cuts that could have hit supplies to the European Union, AP reported.

"I am satisfied that we managed to safeguard the full application of the winter package for the supply needs in Ukraine," said EU energy chief Maros Sefcovic after mediating emergency talks between Russian Energy Minister Alexander Novak and his Ukrainian counterpart Volodymyr Demchyshyn.

Demchyshyn said that both parties had agreed "to obey the rules" until the end of March.

Under the deal sealed in Brussels, Ukraine's Naftogaz will pre-pay and order sufficient quantities of gas to ensure all domestic consumption for March and guarantee undisrupted supplies to the EU. Gazprom commits to supply a set quantity of natural gas each day at agreed on delivery points.

Under the agreement, Kiev and Moscow acknowledged that the supply issue in eastern Ukraine "is highly complex in legal, technical and political terms", and they agreed that more discussions would be required.

Complicating the dispute has been deliveries to Ukraine's rebel-held east, where fighting between Kiev's forces and Russia-backed rebels has killed more than 6,000 people.

Kiev cut gas supplies to rebel-held areas last week, prompting Russia to pump gas there directly. Russia said those deliveries should be counted in gas exports to Ukraine.

Novak told Rossiya 24 TV channel on Tuesday that Russia is ready to consider providing Ukraine with a discount for gas supplies within their existing contract starting from the second quarter.

Moscow earlier agreed to provide a discount of $100 per 1,000 cubic meters of gas for Ukraine in the first quarter. Further supplies are expected to be discussed later this month. Ukraine has been paying $329 per 1,000 cubic meters of Russian gas in the first quarter. Novak, fresh from the round of talks in Brussels, said that Moscow could consider another discount for Ukraine by way of reducing an export duty on gas. "We, obviously, will look into the possibility of providing such a discount, depending on our budget and market environment," he said.

Novak added that Moscow would take into account a change in contract prices for gas for Ukraine which are revised regularly according to a formula pegged to the prices of crude oil and oil products with a lag of six to nine months.

Russia meets around a third of Europe's gas demand, while some 40 percent of Russian gas to the EU goes via Ukraine.