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Russia Resumes Gas Supply to Ukraine

Russia Resumes Gas Supply to UkraineRussia Resumes Gas Supply to Ukraine

Russia's state-run gas company Gazprom resumed supplies to Ukraine on Monday, in a development that will help the country meet its energy needs through the harsh winter months.

Gazprom CEO Alexei Miller said supplies, which were suspended in the spring, recommenced earlier after the company received $234 million out of a promised $500 million prepayment from Kiev, AP reported.

The deal, which was signed last month with the help of the European Union, will ensure that Ukraine will receive Russian gas for six months through March 2016.

Past gas disputes between Russia and Ukraine have led to supply cutoff. One standoff in 2009 caused serious disruptions in shipments to EU countries in the dead of winter. Temperatures in Ukraine can drop to -20 degrees Celsius in winter and most homes in Ukraine rely on piped gas for central heating.

Last winter, Russia and Ukraine struck an emergency deal on gas prices, but that expired.

EU-sponsored talks seeking a similar accord for the coming winter began in March. Under the deal, Russia lowered the price it charged Ukraine to the same level granted to neighboring countries, from $251 per 1,000 cubic meters to about $230.

The European Commission has pledged at least $500 million of aid to Ukraine for the gas supplies.

The price for Russian gas for Ukraine in the fourth quarter of 2015 will stand at around $230 per 1,000 cubic meters, including discount. The agreed 2 billion cubic meters of gas should have been supplied by the beginning of November, which is usually the deadline for gas pumps in underground storage facilities.

Last month, Russia and Ukraine signed a tentative deal on a so-called "winter package", agreeing to technical details.

It was not immediately clear if the deal had been agreed in full. Naftogaz declined immediate comment.

Moscow and Kiev signed a 10-year gas supply deal in 2009, but Russia has twice halted gas flows to its neighbor due to price disagreements and Naftogaz's debts.

Financialtribune.com