Russia And Ukraine Sign 10-Yr Gas Supply Deal

Russian gas export monopoly Gazprom and Ukrainian energy firm Naftogaz have signed 10-year gas supply and transit deals, ending a contract row which left part of Europe without the supplies in midwinter.

The contracts, signed in the presence of the prime ministers of both countries on Monday, allowed Gazprom to resume exports to Europe via Ukraine on Tuesday, almost two weeks after gas supplies were cut off.

Following are some of the details of the contracts, according to a Gazprom statement on Tuesday:

-- The contracts on Russian gas supplies to Ukraine and the transit of Russian gas to Europe via Ukraine were signed separately and are independent from each other. Gazprom says this will help prevent any future severance of European supplies in the case of future gas pricing disputes with Ukraine.

-- Under the transit contract, Gazprom will pay Ukraine the discounted transit fee of $1.7 for transporting 1,000 cubic metres for 100 kilometres. From Jan. 1, 2010, the transit fee will reach market level and will be calculated according to a general European formula.

Gazprom will export up to 120 billion cubic metres (bcm) of gas to Europe via Ukraine in 2009.

-- Under the supply contract, Ukraine will pay the European market price with a discount rate of 20 percent. This brings the gas price for Ukraine to $360 per 1,000 cubic metres in the first quarter of 2009. The price will be changed every quarter and reach full European market level from Jan. 1, 2010.

Gazprom will export 40 bcm of gas for Ukrainian consumption in 2009.

-- Both contracts are valid from 2009 until 2018.

-- The contracts state that Gazprom and Naftogaz deal directly with each other, eliminating intermediaries.