The prime ministers of Russia and Ukraine said early on Sunday they had reached a deal that would allow to restart gas supplies to Europe.

Russian Prime Minister Vladimir Putin said after the talks with his Ukrainian counterpart Yulia Tymoshenko that Ukraine will pay the European price for Russian natural gas with a 20% discount this year while Kiev will not increase the current transit fees it receives for Russian gas.

From 2010, Ukraine will pay the full market price for Russian natural gas while Russia will pay European market prices for transit, Putin said.

Ukraine paid $179.5 per 1,000 cubic meters for Russian natural gas in 2008, which is less than half the price paid by European consumers. The European price for natural gas in the first quarter of this year stands at about $450 per 1,000 cu m but is expected to fall significantly later this year to reflect the decrease in world oil prices.


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