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Agreement reached with Russia in gas debt stand-off

Gazprom announces shipments will resume after deal reached

Russian natural gas giant Gazprom boss Alexei Miller announced today that it will resume shipments to Ukraine next week as soon as Kiev pays its first debt instalment for past supplies.

Russia, Ukraine and the European Union thrashed out a $4.6 billion deal hours earlier that will guarantee Russian gas supplies to Ukraine and the EU.

German, French, Russian and Ukrainian leaders hailed the deal as an "important step toward ensuring uninterrupted gas transit to Europe."

Moscow cut off gas supplies to Ukraine in June over unpaid debts and talks to restore them dragged on amid fighting in eastern Ukraine.

Mr Miller confirmed that Gazprom expects to receive the first Ukrainian tranche of $1.45bn before the end of next week and will start gas supplies to Ukraine within 48 hours of getting the money.

Ukraine has pledged for its part to clear the rest of its $3.1bn gas debt before December 31 and also to pay in advance for Russian gas supplies through to March.

Ukraine will pay $378 per 1,000 cubic metres of Russian gas this year, with the price expected to fall slightly in the first quarter of 2015.

Ukrainian Foreign Minister Pavlo Klimkin said that Ukraine aims to buy four billion cubic metres of gas from Russia over the next two months.

He called the agreement sealed in Brussels "provisional," adding: "We sorted out a number of issues, including the price, but only for this temporary deal.

"It should provide enough safety and security for gas supplies this winter."

Mr Klimkin said that Ukraine will pay in advance on a monthly basis for the gas it buys, allowing Kiev to purchase additional gas if needed.

Russia claims that Ukraine owes it $5.3bn for past supplies, while Ukraine only acknowledges a debt of $3.1bn.

The difference is based on a discounted price that Moscow extended prior to the overthrow of president Victor Yanukovych and the coup government's decision to favour EU links over its traditional ties to Russia.

Brussels said that it has been working closely with international institutions to help foot the gas bill, since Ukraine's economy is in dire straits.

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