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Russia and the Ukraine Reach Agreement on Gas

Russia’s energy minister, Alexander Novak said that the Ukraine can purchase gas from Russia’s Gazprom for $230 per thousand cubic metres during the fourth quarter of this year.

The two countries have been negotiating following the cutting off of supplies by Russia in July when the Ukraine refused to pay $247 per thousand cubic metres.

The agreed price of $230 is $10 more than what the Ukraine had initially wished to pay, and well below what Russia initially wanted to give it for. The figure is also lower than the average price paid by European countries for Russian gas.

The deal is subject to an agreement where the Ukraine will pay Russia $500 million for 2 billion cubic metres of gas. It is being reported that this payment is being provided by international financial institutions to the Ukraine.

Gazprom head, Alexei Miller has stated that there is no guarantee the Ukraine could afford payment for the last two months of the year, hinting that the issue is far from fully resolved. He said ‘one could expect problems’ if the winter is unusually cold in the Ukraine.

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