updated 1/4/2006 7:10:52 AM ET 2006-01-04T12:10:52

The Russian and Ukrainian natural-gas companies agreed Wednesday to resume gas shipments to Ukraine under a plan that allowed both sides to claim victory after a commercial and political dispute that had raised fears of gas shortages in Europe.

The complex pricing plan that Russia and Ukraine agreed to drew in a third company: a Russian-Swiss trading business that will be the sole gas provider to Ukraine.

“The talks ended successfully for Gazprom and Gazprom is completely satisfied,” Chief Executive Alexei Miller said as he and Oleksiy Ivchenko, head of Ukraine’s Naftogaz, announced the five-year contract.

“We reached an agreement — on mutually beneficial, mutually acceptable terms — that will make it possible to supply Ukraine with the full volume of gas it needs and provide for the transport of Russian gas to Europe,” said Ivchenko.

OAO Gazprom will sell gas to the Rosukrenergo trading company for $230 per 1,000 cubic meters as of Jan. 1 — the price it had wanted to start charging Ukraine.

Ukraine will then buy gas from the company for $95 — nearly twice what it had previously been paying Gazprom.

Rosukrenergo, which is owned by Gazprom bank and a Swiss subsidiary of Austria’s Raiffeisen Bank, can pay and charge the different prices because it also buys gas from the Central Asian nation of Turkmenistan that will be added to the mix, Gazprom spokesman Sergei Kupriyanov said. The Turkmen gas sells for about $50 per 1,000 cubic meters, according to Ukrainian President Viktor Yushchenko.

Kupriyanov said the agreed price for Russian gas was $230 as of Jan. 1 but that it would fluctuate with the market. He did not indicate how often the price would be adjusted.

Europe gets about a quarter of its gas from Russia, with some 80 percent arriving in pipelines that cross Ukraine. Russia stopped selling natural gas to its neighbor on Sunday as their price dispute reached a climax, and European customers reported a sharp drop-off in gas supplies on Monday.

After a wave of criticism from Europe, Russia boosted the amount going into Ukrainian pipelines late Monday and supplies appeared to have returned to normal Wednesday. Russia had accused Ukraine of siphoning off gas intended for Europe.

Ivchenko and Miller said the two companies had also agreed to raise the transit fee Gazprom pays to Ukraine to send its gas through the pipelines from $1.09 to $1.60 per thousand cubic meters to travel 100 kilometers — a 47 percent increase. Ukraine will pay cash for gas deliveries and Russia will pay cash for transit, Kupriyanov said, ending a barter system that had displeased Russia.

“Our relationship is shifting completely to a market basis,” Ivchenko said.

EU officials expressed satisfaction that an agreement was reached, saying in a statement that they welcomed the “swift and positive response” to EU appeals for a settlement and the acknowledgment in Russia and Ukraine of “the importance placed by the Union on the maintenance of their role as secure long-term suppliers of natural gas to the EU.”

Despite the resolution, the dispute forced many European countries to question their dependence on Russian energy supplies and Russia’s reliability as a political and economic partner as the country assumes the chairmanship of the Group of Eight — a position it wants to use to boost its international prestige.

“We should discuss what happened in those 24 hours when a number of European countries suffered from a reduced gas supply, which happened for the first time in over 40 years,” Austrian Economy Minister Martin Bartenstein said Wednesday. Austria currently holds the EU’s presidency.

Russia supplied about a third of the gas consumed in Ukraine last year. Gazprom had demanded Ukraine pay $230 — a more-than-fourfold increase over the 2005 price — and Ukraine had resisted mightily, saying while it favored paying market prices it needed them phased in over a transition period of several years.

Talks broke down late last week amid a barrage of accusations of blackmail, sabotage and thievery.

Turkmenistan is Ukraine’s main gas provider, but its gas runs through Russian pipelines.

Kupriyanov said that in 2006, “Rosukrenergo will be the exclusive supplier of all imported gas in Ukraine.”

The trading company has come under scrutiny in Ukraine, where last summer the State Security agency was investigating Naftogaz, Rosukrenergo and groups affiliated with Semyon Mogilevich, a Ukrainian-born Russian citizen and reputed organized crime figure who is wanted by the FBI. The probe was aimed at establishing links between Russian and Ukrainian organized criminal groups, the two companies, and exports of Turkmen gas to Ukraine.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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