Russia, Ukraine reach gas compromise deal
Posted: 20 November 2009 1220 hrs

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YALTA, Ukraine: Russian Prime Minister Vladimir Putin announced late Thursday a compromise deal with Ukraine on the thorny issue of gas supply, lessening the threat of multibillion-dollar fines that might cripple Ukraine's economy.

Speaking after several hours of talks with his Ukrainian counterpart Yulia Tymoshenko, he said Russia had agreed to allow Ukraine to buy less gas next year and it would now be up to the two countries' energy companies to put that agreement in writing.

"Gazprom and Naftogaz will agree on new volumes," Putin said, referring to the two countries' energy firms after talks.

"We deemed it possible to meet Ukraine halfway and tweak several of our earlier agreements," Putin said.

Earlier this year, Russia also agreed to reduce the volume of gas Kiev must acquire this year without imposing fines. That agreement however has yet to be put in writing.

Ukraine's Naftogaz has said it is meant to buy 52 billion cubic metres of Russian gas next year but may only need 27 bcm.

It could have faced potentially crippling multibillion-dollar fines if it did not pay for all the gas it had contracted.

Russia has repeatedly warned of Ukraine's financial problems in the past weeks.

Putin also said Moscow agreed with Kiev's decision to boost the tariffs Russia pays for the transit of Russian gas to Europe through Ukraine by 60 per cent from next year.

The two premiers took pains to allay fears in Europe where officials are concerned that a new gas dispute between the two ex-Soviet nations would lead to a new cut in energy supplies.

Both Putin and Tymoshenko stressed that their countries would fully meet their obligations.

"I sincerely hope that all the agreements that have been previously reached will be implemented," Putin said. "It would be good to meet the New Year without any calamities."

Tymoshenko played down the prospect of gas disruptions, saying: "We will very carefully and precisely carry out our functions of transit of Russian gas."

"Ukraine pays and will pay on time" for Russian gas, she said at the talks.

In January, a row between the two countries resulted in Russian gas being cut to much of Europe for two weeks amid freezing temperatures.

Earlier in the day Ukraine's President Viktor Yushchenko warned Russian gas supplies to Europe are under threat. He said in a letter to Russian President Dmitry Medvedev that current gas contracts between Moscow and Kiev had to be revised.

"Potential risks will appear for the security of gas deliveries to Ukraine and its transit to other European countries," he said ahead of the talks.

While relations between Russia and the pro-Western Yushchenko have reached crisis point, Putin and Tymoshenko have boasted of their cordial relationship.

The meeting in Yalta was also a chance for Putin and Tymoshenko to flaunt their strong relations ahead of presidential polls in Ukraine in January in which the Ukrainian premier is a frontrunner.

Putin's foreign policy aide Yury Ushakov said ahead of the meeting that Putin and Tymoshenko would most likely discuss the presidential vote, set for January 17, even though the issue was not on the official agenda.

In the polls, Tymoshenko will compete with Yushchenko and more pro-Russian candidate Viktor Yanukovich, whom Russia supported during the 2004 election.

The talks were held at the Livadia Palace in the Black Sea resort of Yalta, the venue for the 1945 conference where the Big Three, Joseph Stalin, Franklin Roosevelt and Winston Churchill, redrew the postwar map of Europe.

- AFP/yb