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LIVE

Monday, 21 July, 2008, 00:40 GMT | more prices >>

Moscow says yes to Kiev deal

By Upstream staff

Russian and Ukrainian leaders settled a gas debt row at last-ditch talks in the Kremlin today, just minutes before a Moscow-imposed deadline on Ukraine to pay up or face supply cuts.

The row between the two former Soviet states had sent jitters through customers in Europe, who feared it could escalate into a repeat of early 2006, when a pricing dispute between Moscow and Kiev disrupted shipments to Europe.

"We have agreed that Ukraine will on Thursday start repaying the debt which was amassed in November-December of last year because supply contracts had not been signed by the structures involved," Ukrainian President Viktor Yushchenko told a news conference.

"Gazprom is satisfied with proposals made by the Ukrainian side," President Vladimir Putin told the same news conference.

Russia's gas export monopoly Gazprom, which provides a quarter of Europe's gas, had threatened to cut 25% of its supplies to Ukraine at 1500 GMT today if there was no deal on the debt, which Russia put at $1.5 billion.

Most Russian gas exports pass across Ukrainian territory but both countries have assured Europe that westward gas flows will not be interrupted.