Ukraine's gas transit system started receiving Russian gas for Europe at 07:24 GMT on Tuesday, a Gazprom spokesman reported from Russia's Sudzha gas exit point, RIA Novosti reported.

Following Sunday's talks between the two country's premiers, Russian energy giant Gazprom and Ukrainian energy company Naftogaz signed on Monday a contract on Russian gas supplies to Ukraine for 2009-2019.

"They [Ukrainians] are ready to open the taps for gas transits to Europe. On our side, the pipe has been under pressure since January 13, when Gazprom was ready to start gas supplies to European consumers," Gazprom CEO Alexei Miller said at a meeting with Russian President Dmitry Medvedev.

Following mediation by the EU, the two sides signed a deal on monitoring gas transit a week ago to resume supplies, but deliveries did not restart, with each side blaming the other for the lack of progress.

Apart from Sudzha, Gazprom is also opening up the other gas transit routes, and is set to pump a daily volume of some 400 million cubic meters of gas, a Gazprom source said, adding that the Russian gas monopoly was also expecting a signal to start pumping gas for Ukrainian consumers.

"Gas supplies to Ukraine will total 40 billion cubic meters in 2009," the Russian energy giant said in a statement, adding that "the volume of gas transits through Ukraine in 2009 will total up to 120 bln cubic meters."

Miller said Ukraine would pay $360 for 1,000 cubic meters of Russian natural gas in the first quarter of 2009.

"In the first quarter of this year gas will be supplied [to Ukraine] at the market price of $450," he said. "With a 20% discount the price will be $360."

Ukraine paid $179.5 per 1,000 cubic meters of gas in 2008. Gazprom had insisted on a market price of $450 for 2009.

The Gazprom chief warned that his company would make Ukraine switch to 100% prepayments if it failed to pay for Russian gas supplies on time.

"The contract stipulates a special mechanism: if payments are disrupted and we are confronted with non-payments, we will automatically switch to a 100% prepayment system. If this happens, Ukraine will pay one month in advance," Miller said.


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