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. Last Updated: 07/27/2016

Ukraine Signs Deal, Ends Gas Standoff

KIEV -- Ukraine signed off on a deal Thursday that will provide it with some of the cheapest supplies of imported natural gas in the former Soviet Union, ending what had been a bitter feud with Moscow over prices.

Under the deal, Ukraine will receive 34 billion cubic meters of Russian and Central Asian gas this year at a price of $95 per 1,000 cubic meters, state-controlled gas company Naftogaz said -- a nearly twofold increase for Ukraine but far less than the $230 it would pay if it was getting only Russian gas.

The deal also stipulates that Ukraine will receive up to 60 billion cubic meters of gas annually at the same price through the end of 2010, Naftogaz spokesman Eduard Zaniuk said.

"All the documents were signed today, the talks are officially over," Zaniuk said at a brief news conference after three days of tense talks.

The agreement appears to represent a major victory for Ukraine, which initially had been promised the $95 price only for the first six months of this year. Naftogaz insisted that it did not surrender control over any of the country's lucrative pipelines, which pump Russian gas onto Europe, to cement the deal.

The deal came nearly a month after Russia and Ukraine reached a framework agreement on Jan. 4 to settle a bitter price dispute that caused a temporary drop in supplies to Europe when Russia turned off the taps to Ukraine, sparking concerns about energy security across the continent.

At the crux of the Jan. 4 agreement was a plan to create the new venture, co-owned by Ukraine's Naftogaz and the intermediary Rosukrenergo, to supply gas to Ukrainian industrial consumers.

The proposal sparked criticism in Ukraine over the involvement of RosUkrEnergo, a shadowy company about which little was known. RosUkrEnergo is owned 50-50 by Gazprom and a group of secret investors.

But Ukraine's government gave its approval Tuesday, paving the way for Thursday's signing. The new venture, called Rosukrenergo, will supply Ukraine's industrial consumers with gas together with Naftogaz. Naftogaz retains the right to supply residential consumers.

Ukraine currently uses some 80 billion cubic meters of gas a year, and is able to provide only about 20 billion cubic meters of this itself. This year, it is making up the difference with a separate contract with Turkmenistan, but that contract expires at the end of 2006. Naftogaz and RosUkrEnergo officials refused to answer journalists' questions after the short briefing.

Bulgaria's gas deal with Gazprom will not be reviewed for now, but talks will continue and a change cannot be completely ruled out, Bulgaria's economy and energy minister said on Thursday.

Rumen Ovcharov admitted on his return from talks in Moscow that in current arrangements "there is an apparent discrepancy between market prices and the prices at which we are getting a share of our gas supplies."