Kiev, Moscow clinch deal on Russian gas supply

Moscow and Kiev on Thursday clinched a multi-billion dollar deal that will guarantee that Russian gas exports flow into Ukraine and beyond to the European Union throughout the winter, an agreement reached despite their intense rivalry over the fighting in eastern Ukraine.

EU Commission President José Manuel Barroso, whose offices mediated the talks since June, said the EU will also help cash-strapped Ukraine with the payments through aid and guarantees.

"There is now no reason for people in Europe to stay cold this winter," he said. Barroso added that he was "hopeful that the agreement can contribute to increased trust between Russia and Ukraine."

EU energy chief Güenther Oettinger said that "we can guarantee a security of supply over the winter," not only for Ukraine but also for the EU nations closest to the region that stood to suffer should the gas standoff have worsened.

A similar standoff in 2009 caused serious disruptions in gas flowing from Russia into the EU and the bloc sought to avoid a repeat.

And with each week, the need for a resolution became more pressing, as winter is fast approaching in Ukraine, where temperatures often sink below freezing for days.

Russia cut off gas supplies to Ukraine in June after disputes over Russia's annexation of Crimea in March. Ukraine since then has been relying on gas transfers from other European countries and its own reserves.

Throughout the talks, the agreement hinged on the question whether Ukraine was in a position to come up with the necessary cash to pay for the gas. "Yes, they are," a confident Oettinger said. Oettinger said the $4.6 billion deal should extend through March.

"We can claim and pay for amounts that we need. That question has been totally settled," said Yuriy Prodan, Ukraine's energy minister. "There will be no problems."

Under the deal, Ukraine will pay for its outstanding debt by making a $1.45 billion deposit without delay, and $1.65 billion by year's end. The final sum of debt will be determined through arbitration.

For new gas, Russia will only deliver after pre-payment and Ukraine intends to buy some $1.5 billion by the end of December.

The EU said in a statement it had been "working intensively" with international institutions and Ukraine to secure funds to pay for gas delivery in the coming winter.

"Unprecedented levels of EU aid will be disbursed in a timely manner," it said.

The deal only extends through March and the difficulties of the talks were immediately evident when the Russians and Ukrainians started disagreeing on terms and prices of gas for next summer.

Russian President Vladimir Putin and his Ukrainian counterpart, Petro Poroshenko, agreed earlier this month on the broad outline of a deal, but the talks bogged down on financial issues, centering on payment guarantees for Moscow.

The Associated Press